Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 31, 2020 | Jun. 30, 2019 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 001-37372 | ||
Entity Registrant Name | Collegium Pharmaceutical, Inc | ||
Entity Incorporation, State or Country Code | VA | ||
Entity Tax Identification Number | 03-0416362 | ||
Entity Address, Address Line One | 100 Technology Center Drive | ||
Entity Address, City or Town | Stoughton | ||
Entity Address, State or Province | MA | ||
Entity Address, Postal Zip Code | 02072 | ||
City Area Code | 781 | ||
Local Phone Number | 713-3699 | ||
Title of 12(b) Security | Common stock | ||
Trading Symbol | COLL | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 416 | ||
Entity Common Stock, Shares Outstanding | 34,050,862 | ||
Entity Central Index Key | 0001267565 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 170,019 | $ 146,633 |
Accounts receivable | 72,953 | 77,946 |
Inventory | 9,643 | 7,817 |
Prepaid expenses and other current assets | 3,105 | 5,116 |
Total current assets | 255,720 | 237,512 |
Property and equipment, net | 11,854 | 9,274 |
Operating lease assets | 9,047 | |
Intangible assets, net | 29,503 | 44,255 |
Other noncurrent assets | 178 | 204 |
Total assets | 306,302 | 291,245 |
Current liabilities | ||
Accounts payable | 6,247 | 12,150 |
Accrued expenses | 33,480 | 30,551 |
Accrued rebates, returns and discounts | 157,549 | 144,783 |
Current portion of term loan payable | 3,833 | 1,642 |
Current portion of operating lease liabilities | 656 | |
Total current liabilities | 201,765 | 189,126 |
Term loan payable, net of current portion | 7,667 | 9,858 |
Operating lease liabilities, net of current portion | 9,438 | |
Other noncurrent liabilities | 676 | |
Total liabilities | 218,870 | 199,660 |
Commitments and contingencies (see Note 11) | ||
Shareholders' equity: | ||
Preferred stock, $0.001 par value; authorized shares - 5,000,000 at December 31, 2019 and December 31, 2018; issued and outstanding shares - none at December 31, 2019 and December 31, 2018 | ||
Common stock, $0.001 par value; authorized shares - 100,000,000 at December 31, 2019 and December 31, 2018; issued and outstanding shares - 33,678,840 at December 31, 2019 and 33,265,629 at December 31, 2018 | 34 | 33 |
Additional paid-in capital | 447,297 | 428,729 |
Accumulated deficit | (359,899) | (337,177) |
Total shareholders' equity | 87,432 | 91,585 |
Total liabilities and shareholders' equity | $ 306,302 | $ 291,245 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 33,678,840 | 33,265,629 |
Common stock, outstanding shares | 33,678,840 | 33,265,629 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | |||||||||||
Product revenues, net | $ 74,203 | $ 72,942 | $ 75,040 | $ 74,516 | $ 73,427 | $ 70,176 | $ 73,061 | $ 63,749 | $ 296,701 | $ 280,413 | $ 28,476 |
Costs and expenses | |||||||||||
Cost of product revenues | 49,088 | 46,754 | 48,654 | 49,164 | 29,726 | 46,007 | 46,838 | 43,106 | 193,660 | 165,677 | 2,595 |
Research and development | 2,398 | 2,491 | 2,459 | 2,992 | 2,249 | 1,907 | 2,237 | 2,268 | 10,340 | 8,661 | 8,572 |
Selling, general and administrative | 25,090 | 30,072 | 28,935 | 32,352 | 30,451 | 33,448 | 31,279 | 31,582 | 116,449 | 126,760 | 92,756 |
Total costs and expenses | 76,576 | 79,317 | 80,048 | 84,508 | 62,426 | 81,362 | 80,354 | 76,956 | 320,449 | 301,098 | 103,923 |
Loss from operations | (2,373) | (6,375) | (5,008) | (9,992) | 11,001 | (11,186) | (7,293) | (13,207) | (23,748) | (20,685) | (75,447) |
Interest expense | (211) | (228) | (236) | (234) | (2,404) | (5,868) | (6,158) | (5,700) | (909) | (20,130) | |
Interest income | 383 | 494 | 532 | 526 | 489 | 552 | 391 | 255 | 1,935 | 1,687 | 582 |
Net loss | $ (2,201) | $ (6,109) | $ (4,712) | $ (9,700) | $ 9,086 | $ (16,502) | $ (13,060) | $ (18,652) | $ (22,722) | $ (39,128) | $ (74,865) |
Loss per share - basic and diluted | $ (0.07) | $ (0.18) | $ (0.14) | $ (0.29) | $ (0.68) | $ (1.19) | $ (2.47) | ||||
Weighted-average shares - basic and diluted (in shares) | 33,600,566 | 33,481,923 | 33,397,709 | 33,331,917 | 33,453,844 | 32,953,808 | 30,265,262 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at beginning of year at Dec. 31, 2016 | $ 29 | $ 358,063 | $ (223,184) | $ 134,908 |
Balance at beginning of year, shares at Dec. 31, 2016 | 29,364,100 | |||
Increase (decrease) in convertible redeemable preferred stock | ||||
Exercise of common stock options | $ 1 | 735 | 736 | |
Exercise of common stock options, shares | 158,801 | |||
Issuance for employee stock purchase plan | 1,141 | 1,141 | ||
Issuance for employee stock purchase plan, shares | 110,841 | |||
Vesting of restricted stock units ("RSUs"), shares | 14,757 | |||
Shares withheld for employee taxes upon vesting of RSUs | (68) | (68) | ||
Shares withheld for employee taxes upon vesting of RSUs, shares | (4,819) | |||
Public offerings of common stock, net of issuance costs | $ 3 | 34,280 | $ 34,283 | |
Public offerings of common stock, net of issuance costs, shares | 3,126,998 | 3,126,998 | ||
Stock-based compensation | 7,945 | $ 7,945 | ||
Net loss | (74,865) | (74,865) | ||
Balance at end of year at Dec. 31, 2017 | $ 33 | 402,096 | (298,049) | 104,080 |
Balance at end of year, shares at Dec. 31, 2017 | 32,770,678 | |||
Increase (decrease) in convertible redeemable preferred stock | ||||
Exercise of common stock options | 4,255 | 4,255 | ||
Exercise of common stock options, shares | 349,777 | |||
Issuance for employee stock purchase plan | 1,117 | 1,117 | ||
Issuance for employee stock purchase plan, shares | 86,929 | |||
Vesting of restricted stock units ("RSUs"), shares | 85,119 | |||
Shares withheld for employee taxes upon vesting of RSUs | (560) | $ (560) | ||
Shares withheld for employee taxes upon vesting of RSUs, shares | (26,874) | |||
Public offerings of common stock, net of issuance costs, shares | 0 | |||
Stock-based compensation | 13,778 | $ 13,778 | ||
Issuance of warrant | 8,043 | 8,043 | ||
Net loss | (39,128) | (39,128) | ||
Balance at end of year at Dec. 31, 2018 | $ 33 | 428,729 | (337,177) | $ 91,585 |
Balance at end of year, shares at Dec. 31, 2018 | 33,265,629 | 33,265,629 | ||
Increase (decrease) in convertible redeemable preferred stock | ||||
Exercise of common stock options | 2,046 | $ 2,046 | ||
Exercise of common stock options, shares | 201,308 | 201,308 | ||
Issuance for employee stock purchase plan | $ 1 | 816 | $ 817 | |
Issuance for employee stock purchase plan, shares | 74,142 | 74,142 | ||
Vesting of restricted stock units ("RSUs"), shares | 196,139 | |||
Shares withheld for employee taxes upon vesting of RSUs | (822) | $ (822) | ||
Shares withheld for employee taxes upon vesting of RSUs, shares | (58,378) | |||
Public offerings of common stock, net of issuance costs, shares | 0 | |||
Stock-based compensation | 16,528 | $ 16,528 | ||
Net loss | (22,722) | (22,722) | ||
Balance at end of year at Dec. 31, 2019 | $ 34 | $ 447,297 | $ (359,899) | $ 87,432 |
Balance at end of year, shares at Dec. 31, 2019 | 33,678,840 | 33,678,840 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | |
Public offerings of common stock, issuance costs | $ 1,253 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities | |||
Net loss | $ (22,722) | $ (39,128) | $ (74,865) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Amortization expense for Nucynta asset acquisition | 14,752 | 109,834 | |
Depreciation and amortization, excluding Nucynta asset acquisition | 731 | 1,074 | 594 |
Non-cash impairment charges | 1,845 | ||
Lease incentive obligation | (34) | ||
Stock-based compensation expense | 16,528 | 13,778 | 7,945 |
Non-cash lease expense | 313 | ||
Non-cash interest expense for Nucynta asset acquisition | 19,281 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 4,993 | (68,231) | (7,840) |
Inventory | (1,826) | 219 | (497) |
Prepaid expenses and other assets | 2,037 | (166) | (1,057) |
Accounts payable | (5,903) | 6,465 | (3,422) |
Accrued expenses | 6,056 | 18,995 | (527) |
Accrued rebates, returns and discounts | 12,766 | 106,593 | 15,784 |
Operating lease assets and liabilities | 734 | ||
Deferred revenue | (4,944) | ||
Other long-term liabilities | (676) | 676 | |
Net cash provided by (used in) operating activities | 27,783 | 169,390 | (67,018) |
Investing activities | |||
Upfront cash paid for Nucynta asset acquisition | (18,877) | ||
Purchases of property and equipment | (6,438) | (5,477) | (990) |
Net cash used in investing activities | (6,438) | (24,354) | (990) |
Financing activities | |||
Proceeds from issuances of common stock from employee stock purchase plans | 817 | 1,117 | 1,141 |
Proceeds from the exercise of stock options | 2,046 | 4,255 | 736 |
Payments made for employee restricted stock tax withholdings | (822) | (560) | (68) |
Proceeds from issuances of common stock from public offerings, net of issuance costs of $-, $30 and $1,198, respectively | (30) | 34,338 | |
Proceeds from term loan amendment, net of repayment of amended term loan | 10,021 | ||
Repayment of term loan | (2,667) | ||
Repayment of asset acquisition obligations | (132,000) | ||
Net cash provided by (used in) financing activities | 2,041 | (117,197) | 33,480 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 23,386 | 27,839 | (34,528) |
Cash, cash equivalents and restricted cash at beginning of period | 146,633 | 118,794 | 153,322 |
Cash, cash equivalents and restricted cash at end of period | 170,019 | 146,633 | 118,794 |
Supplemental disclosure of cash flow information | |||
Cash paid for offering costs | 30 | 1,228 | |
Cash paid for interest | 709 | 582 | 139 |
Supplemental disclosure of non-cash activities | |||
Acquisition of property and equipment in accounts payable and accrued expenses | 134 | 3,261 | $ 216 |
Operating lease assets assumed | 9,957 | ||
Operating lease liabilities assumed | $ 10,691 | ||
Liabilities assumed from Nucynta asset acquisition included in accrued rebates, returns and discounts | 22,406 | ||
Liabilities assumed from Nucynta asset acquisition included as a reduction to accounts receivable | 254 | ||
Warrant issued in connection with Nucynta asset acquisition | $ 8,043 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Issuance costs of common stock from public offerings | $ 30 | $ 1,198 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2019 | |
NATURE OF BUSINESS | |
NATURE OF BUSINESS | 1. NATURE OF BUSINESS Organization Collegium Pharmaceutical, Inc. (the “Company”) was incorporated in Delaware in April 2002 and then reincorporated in Virginia in July 2014. The Company has its principal operations in Stoughton, Massachusetts. The Company is a specialty pharmaceutical company committed to being the leader in responsible pain management. The Company’s first product, Xtampza ER is an abuse-deterrent, extended-release, oral formulation of oxycodone. In April 2016, the U.S. Food and Drug Administration (“FDA”) approved the Company’s new drug application (“NDA”) for Xtampza ER for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. In June 2016, the Company announced the commercial launch of Xtampza ER. The Company’s product portfolio also includes Nucynta ER and Nucynta IR (the “Nucynta Products”). In December 2017, the Company entered into a Commercialization Agreement (the “Nucynta Commercialization Agreement”) with Assertio Therapeutics, Inc. (formerly known as Depomed) (“Assertio”), pursuant to which the Company acquired the right to commercialize the Nucynta Products in the United States. The Company began shipping and recognizing product sales on the Nucynta Products on January 9, 2018 and began marketing the Nucynta Products in February 2018. Nucynta ER is an extended-release formulation of tapentadol that is indicated for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment, including neuropathic pain associated with diabetic peripheral neuropathy in adults, and for which alternate treatment options are inadequate. Nucynta IR is an immediate-release formulation of tapentadol that is indicated for the management of acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate in adults. The Company’s operations are subject to certain risks and uncertainties. The principal risks include inability to successfully commercialize products, changing market conditions for products and development of competing products, changing regulatory environment and reimbursement landscape, litigation related to opioid marketing and distribution practices, manufacture of adequate commercial inventory, inability to secure adequate supplies of active pharmaceutical ingredients, key personnel retention, protection of intellectual property, patent infringement litigation and the availability of additional capital financing on terms acceptable to the Company. Liquidity The Company believes that its cash and cash equivalents at December 31, 2019, together with expected cash inflows from the commercialization of its products, will enable the Company to fund its operating expenses, debt service and capital expenditure requirements under its current business plan for the foreseeable future. The Company has experienced net losses since its inception, and as of December 31, 2019, had an accumulated deficit of $359,899. A successful transition to profitable operations is dependent upon achieving a level of revenues adequate to support the Company’s cost structure. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The consolidated financial statements include the accounts of Collegium Pharmaceutical, Inc. as well as the accounts of its subsidiaries Collegium Securities Corp. (a Massachusetts corporation), incorporated in December 2015, and Collegium NF LLC (a Delaware limited liability company), incorporated in December 2017, both wholly owned subsidiaries requiring consolidation. The consolidated financial statements are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, costs and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. Estimates in the Company’s consolidated financial statements include revenue recognition, including the estimates of product returns, units prescribed, discounts and allowances related to commercial sales of products, estimates of useful lives with respect to intangible assets, accounting for stock based compensation, contingencies, impairment of intangible assets and tax valuation reserves. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates under different assumptions or conditions. Fair Value Measurements Disclosures of fair value information about financial instruments are required, whether or not recognized in the balance sheet, for financial instruments with respect to which it is practicable to estimate that value. Fair value measurements and disclosures describe the fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows: Level 1 inputs: Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 inputs: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3 inputs: Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability Transfers are calculated on values as of the transfer date. There were no transfers between Levels 1 2 and 3 The following tables present the Company’s financial instruments carried at fair value using the lowest level input applicable to each financial instrument at December 31, 2019 and 2018. Significant Quoted Prices other Significant in active observable unobservable markets inputs inputs December 31, 2019 Total (Level 1) (Level 2) (Level 3) Money market funds, included in cash equivalents $ 94,841 $ 94,841 $ — $ — December 31, 2018 Money market funds, included in cash equivalents $ 92,914 $ 92,914 $ — $ — As of December 31, 2019, and December 31, 2018, the carrying amounts of the cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, accrued rebates, returns and discount, operating lease liabilities, and term loan payable approximated their estimated fair values. Concentration of Credit Risk Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash deposits primarily with one reputable and nationally recognized financial institution. In addition, as of December 31, 2019, the Company’s cash equivalents were invested in money market funds. The Company has not experienced any material losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the financial institutions in which those deposits are held. Three customers comprised 10% or more of the Company’s accounts receivable balance as of December 31, 2019. These customers comprised 51%, 27% and 19% of the accounts receivable balance, respectively. The same three customers comprised 10% or more of the Company’s revenue during the year ended December 31, 2019. These customers comprised 34%, 31% and 30% of revenue, respectively. To date, the Company has not experienced any losses with respect to the collection of its accounts receivable and believes that its entire accounts receivable balance is collectible as of December 31, 2019. The Company has no financial Cash and Cash Equivalents Cash and cash equivalents include cash in readily available checking and savings accounts and money market funds. The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company’s cash equivalents, which consist of money market funds, are measured at fair value on a recurring basis. As of December 31, 2019 and 2018, the carrying amount of cash equivalents was $94,841 and $92,914, respectively, which approximates fair value and was determined based upon Level 1 inputs. Money market funds are valued using quoted market prices with no valuation adjustments applied. Accordingly, these securities are categorized as Level 1. Restricted Cash Restricted cash is reported as non-current unless the restrictions are expected to be released in the next twelve months. The Company had no restricted cash as of December 31, 2019 and 2018. As of December 31, 2017, the Company had restricted cash of $97, which represents cash held in a depository account at a financial institution to collateralize a conditional stand by letter of credit for the Company’s former headquarters. Inventory Inventories are stated at the lower of cost or net realizable value. Inventory costs consist of costs related to the manufacturing of the Company’s products, which are primarily the costs of contract manufacturing. The Company determines the cost of its inventories on a specific identification basis, and removes amounts from inventories on a first-in, first-out basis. If the Company identifies excess, obsolete or unsalable items, inventories are written down to their realizable value in the period in which the impairment is identified. These adjustments are recorded based upon various factors, including the level of product manufactured by the Company, the level of product in the distribution channel, current and projected demand and the expected shelf-life of the inventory components. As of December 31, 2019, cumulative estimates of excess inventory recorded as a component of cost of product revenues were immaterial. The Company outsources the manufacturing of Xtampza ER to a sole contract manufacturer that produces the finished product. In addition, the Company currently relies on a sole supplier for the active pharmaceutical ingredient in Xtampza ER. The Company’s Nucynta Commercialization Agreement partner also relies on a sole supplier to produce the finished products. Accordingly, the Company has concentration risk associated with its commercial manufacturing of Xtampza ER and the Nucynta Products. The Company has capitalized $9,643 of inventory as of December 31, 2019. The Company expects sales of the capitalized units to occur during the next twelve months. Property and Equipment Property and equipment, including leasehold improvements, are recorded at cost. Maintenance and repair costs are expensed as incurred. Costs which materially improve or extend the lives of existing assets are capitalized. Property and equipment are depreciated when placed into service using the straight-line method based on their estimated useful lives as follows: Asset Category Estimated Useful Life Computers and office equipment 3-5 years Laboratory equipment 5 years Furniture and fixtures 7 years Manufacturing equipment 5-10 years Leasehold improvements Lesser of remaining lease term and estimated useful life Costs for capital assets not yet placed into service have been capitalized as construction-in-progress, and will be depreciated in accordance with the above guidelines once placed into service. Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in the statements of operations. Intangible Assets The Company records the fair value of finite-lived intangible assets as of the transaction date. Intangible assets are then amortized over their estimated useful lives using either the straight-line method, or if reliably determinable, based on the pattern in which the economic benefit of the asset is expected to be utilized. The Company tests intangible assets for potential impairment whenever triggering events or circumstances present an indication of impairment. If the sum of expected undiscounted future cash flows of the intangible assets is less than the carrying amount of such assets, the intangible assets would be written down to the estimated fair value, calculated based on the present value of expected future cash flows. Revenue Recognition The Company’s revenue to date is from sales of the Company’s products, which are primarily sold to distributors, which in turn sell the product to pharmacies for the treatment of patients. In accordance with ASC Topic 606, Revenue from Contracts with Customers Research and Development Costs Research and development costs are charged to expense as incurred and consist of costs incurred to further the Company’s research and development activities, including salaries and employee related costs, costs associated with conducting preclinical and clinical activities, including fees paid to third-party professional consultants and service providers, costs incurred under preclinical and clinical trial agreements, costs for laboratory supplies, costs to acquire, develop and manufacture preclinical study and clinical trial materials, facilities, depreciation and other expenses including allocated expenses for rent and maintenance of facilities. Patent Costs Costs related to filing and pursuing patent applications are recorded as selling, general and administrative expense as incurred since the recoverability of such expenditures is uncertain. Advertising and Product Promotion Costs Advertising and product promotion costs are included in selling, general and administrative expenses and were $9,527, $17,497, $11,019 in the years ended December 31, 2019, 2018, and 2017 respectively. Advertising and product promotion costs are expensed as incurred. Stock-Based Compensation The Company accounts for grants of stock options, restricted stock units and performance share units to employees, as well as to the Board of Directors, based on their grant date fair value and recognizes compensation expense over their vesting period, net of actual forfeitures. The Company estimates the fair value of stock options as of the date of grant using the Black-Scholes option pricing model. The Company estimates restricted stock units and performance share units based on the fair value of the underlying common stock as determined by management. For performance share units, the Company estimates the number of shares that will vest based upon the probability of achieving performance metrics. Income Taxes The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and the absence of carryback available from results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future, in excess of its net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions on the basis of a two-step process whereby (i) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more likely than not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company will recognize interest and penalties related to uncertain tax positions within income tax expense. Any accrued interest and penalties will be included within the related tax liability. As of December 31, 2019 and December 31, 2018, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements of operations. Net Loss per Common Share Basic net loss per common share is calculated by dividing the net loss attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period, as determined in accordance with the treasury stock accounting method. For purposes of the diluted net loss per share calculation, stock options, warrants and unvested restricted stock units are considered potentially dilutive securities. Because the Company has reported a net loss for the years ended December 31, 2019, 2018 and 2017, diluted net loss per common share is the same as basic net loss per common share for those periods. Recently Adopted Accounting Pronouncements New accounting pronouncements are issued periodically by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as of the specified effective dates. Adoption of ASC Topic 606, Revenue from Contracts with Customers The Company adopted ASC Topic 606 on January 1, 2018 using the modified retrospective method. Under this method, prior periods were not retrospectively adjusted and, as a result, the reported results for 2018 reflect the application of ASC Topic 606 guidance while the reported results for 2017 were prepared under the guidance of ASC Topic 605, Revenue Recognition Immediately prior to the adoption date of January 1, 2018, the Company recognized revenue in accordance with legacy GAAP, or when there was persuasive evidence of an arrangement; when title and risk of loss had passed to the customer; when estimated provisions for chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns were reasonably determinable; and when collectability was reasonably assured. The satisfaction of these criteria generally occurred upon delivery of products to customers, or the sell-in method of revenue recognition under legacy GAAP. The Company began recognizing revenue on the sell-in method in the third quarter of 2017. As a result of the considerations discussed above, the Company concluded that, as of the adoption date, it would record revenue net of a provision for estimated chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns upon delivery of products to customers under either the sell-in method of revenue recognition under legacy GAAP or under ASC Topic 606 as of the adoption date. Therefore, the adoption of ASC Topic 606 did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of January 1, 2018. Prior to the third quarter of 2017, the Company recognized revenue when products were dispensed to end users, or the sell-through method of revenue recognition under legacy GAAP, as the Company did not have sufficient experience with product sales to estimate returns at the time product was sold to customers. In the third quarter of 2017, the Company transitioned to the sell-in method of revenue recognition and the Company recorded a cumulative one-time $4,377 increase to revenues during the three months ended September 30, 2017. Therefore, the adoption of Topic 606 would not have had a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of December 31, 2018. For additional information related to revenue from contracts with customers and accounting policies, please see Note 3. Adoption of ASC Topic 842, Leases The Company adopted Accounting Standard Updated (“ASU”) 2016-02, Leases Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new standard is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2016-13 on January 1, 2020 and the adoption did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes The amendments in ASU 2019-12 affect a wide variety of income tax accounting standards with the objective of reducing their complexity. The Company is currently evaluating the standard’s effect on the Company’s consolidated financial statements. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 12 Months Ended |
Dec. 31, 2019 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | 3. REVENUE FROM CONTRACTS WITH CUSTOMERS The Company’s revenue to date is from sales of the Company’s products, which are primarily sold to distributors (“customers”), which in turn sell the product to pharmacies for the treatment of patients (“end users”). Revenue Recognition In accordance with ASC Topic 606, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Performance Obligations The Company determined that performance obligations are satisfied and revenue is recognized when a customer takes control of the Company’s product, which occurs at a point in time. This generally occurs upon delivery of the products to customers, at which point the Company recognizes revenue and records accounts receivable, which represents the Company’s only contract asset. Payment is typically received 30 Transaction Price and Variable Consideration Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”). The transaction price for product sales includes variable consideration related to sales deductions, including (1) rebates and incentives, including managed care rebates, government rebates, co-pay program incentives, and sales incentives and allowances; (2) product returns, including return estimates for both the Nucynta Products and Xtampza ER; and (3) trade allowances and chargebacks, including fees for distribution service fees, prompt pay discounts, and chargebacks. The Company will estimate the amount of variable consideration that should be included in the transaction price under the expected value method for all sales deductions other than trade allowances, which are estimated under the most likely amount method. These provisions reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract. Provisions for rebates and incentives are based on the estimated amount of rebates and incentives to be claimed on the related sales from the period. As the Company’s rebates and incentives are based on products dispensed to patients, the Company is required to estimate the expected value of claims at the time of product delivery to distributors. Given that distributors sell the product to pharmacies, which in turn dispense the product to patients, claims can be submitted significantly after the related sales are recognized. The Company’s estimates of these claims are based on the historical experience of existing or similar programs, including current contractual and statutory requirements, specific known market events and trends, industry data, and estimated distribution channel inventory levels. Accruals and related reserves required for rebates and incentives are adjusted as new information becomes available, including actual claims. If actual results vary, the Company may need to adjust these estimates, which could have an effect on earnings in the period of the adjustment. Provisions for product returns are based on product-level historical trends, as well as relevant market events and other factors. For the Nucynta Products, estimates of product returns are primarily based on historical trends as the Nucynta Products have been commercially sold for a number of years. For Xtampza ER, since the product has only been commercially sold since June 2016, estimates of product returns are based on a combination of historical returns processed to date, taking into consideration the expiration date of product upon delivery to customers, as well as forecasted customer buying patterns, shipment and prescription trends, channel inventory levels, and other specifically known market events and trends. Provisions for trade allowances and chargebacks are primarily based on customer-level contractual terms. Accruals and related reserves are adjusted as new information becomes available, which generally consists of actual trade allowances and chargebacks processed relating to sales recognized in the period. The amount of variable consideration that is included in the transaction price may be constrained and is included in net sales only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. In general, performance obligations do not include any estimated amounts of variable consideration that are constrained. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. The following table summarizes activity in each of the Company’s product revenue provision and allowance categories for the year ended December 31, 2019 and 2018: Trade Rebates and Product Allowances and Incentives (1) Returns (2) Chargebacks (3) Balance at December 31, 2017 $ 12,647 $ 3,137 $ 2,256 Provision related to current period sales 243,158 17,326 68,189 Liabilities assumed from asset acquisition (4) 22,406 — 254 Changes in estimate related to prior period sales (32) — — Credits/payments made (148,861) (4,998) (55,858) Balance at December 31, 2018 $ 129,318 $ 15,465 $ 14,841 Provision related to current period sales 263,315 14,991 65,155 Changes in estimate related to prior period sales (2,865) — — Credits/payments made (259,867) (2,808) (65,976) Balance at December 31, 2019 $ 129,901 $ 27,648 $ 14,020 (1) Provisions for rebates and incentives includes managed care rebates, government rebates and co-pay program incentives. Provisions for rebates and incentives are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s Consolidated Balance Sheets. (2) Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s Consolidated Balance Sheets. (3) Provisions for trade allowances and chargebacks include fees for distribution service fees, prompt pay discounts, and chargebacks. Trade allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s Consolidated Balance Sheets. (4) The Company recorded a liability of $22,660 related to sales of Nucynta Products that occurred prior to the closing date of January 9, 2018, for which the Company is liable under the terms of the Nucynta Commercialization Agreement. This assumed liability, representing $22,406 of assumed rebates and incentives and $254 of assumed trade allowances and chargebacks, was recorded as a component of the intangible asset acquired in the Company’s Consolidated Balance Sheets. As of December 31, 2019, the Company did not have any transaction price allocated to remaining performance obligations and any costs to obtain contracts with customers, including pre-contract costs and set up costs, were immaterial. Disaggregation of Revenue The Company disaggregates its product revenue, net from contracts with customers into the categories included in the table below. These categories depict how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors : Year ended December 31, 2019 2018 2017 Xtampza ER $ 105,012 $ 69,383 $ 28,476 Nucynta Products 191,689 211,030 — Total product revenues, net $ 296,701 $ 280,413 $ 28,476 For the year ended December 31, 2019, the Company recognized Nucynta IR and Nucynta ER product revenues, net of $117,680 and $74,009, respectively. For the year ended December 31, 2018, the Company recognized Nucynta IR and Nucynta ER product revenues, net of $129,917 and $81,113, respectively. |
LICENSE AGREEMENTS
LICENSE AGREEMENTS | 12 Months Ended |
Dec. 31, 2019 | |
LICENSE AGREEMENTS | |
LICENSE AGREEMENTS | 4. LICENSE AGREEMENTS The Company periodically enters into license agreements to develop and commercialize its products. As of December 31, 2019 and 2018, the Company’s only license agreement was the Nucynta Commercialization Agreement. On January 9, 2018 (the “Nucynta Commercialization Closing Date”), the Company consummated the transactions contemplated by the Nucynta Commercialization Agreement, pursuant to which Assertio agreed to grant a sublicense of certain of its intellectual property related to the Nucynta Products for commercialization in the United States. The Company began recording revenues from sales of the Nucynta Products on the Nucynta Commercialization Closing Date and began commercial promotion of the Nucynta Products in February 2018. Pursuant to the Nucynta Commercialization Agreement, the Company paid a one-time, non-refundable license fee of $10,000 to Assertio on the Nucynta Commercialization Closing Date, $6,223 for transferred inventory and $1,987 as reimbursement for prepaid expenses. The Company also assumed the existing liabilities of the Nucynta Products, including $22,660 related to sales of Nucynta Products that occurred prior to the Nucynta Commercialization Closing Date. The Nucynta Commercialization Agreement initially required the Company to pay a guaranteed minimum royalty of $135,000 per year through December 2021, payable in quarterly payments of $33,750, prorated in 2018 for the Nucynta Commercialization Closing Date, as well as a variable royalty based on annual net sales over $233,000. Beginning January 2022 and for each year of the Nucynta Commercialization Agreement term thereafter, the Company was required to pay a variable royalty on annual net sales of the Nucynta Products, but without a guaranteed minimum. Effective August 2018, the Company entered into a Second Amendment to the Nucynta Commercialization Agreement to clarify the mechanism for transferring title of products to be sold by the Company pursuant to the agreement and various related matters. The Second Amendment did not have an impact on the Company’s financial statements. Effective November 2018, the Company entered into the Third Amendment to the Nucynta Commercialization Agreement to adjust the royalty structure and termination clauses. Pursuant to the amended Nucynta Commercialization Agreement, the $135,000 guaranteed minimum annual royalties were eliminated, and the Company was no longer required to secure its royalty payment obligations with a standby letter of credit. Beginning on January 1, 2019 and thereafter, the Company will be conditionally obligated to make royalty payments to Assertio conditional upon net sales and based on the following royalty structure for the period between January 1, 2019 and December 31, 2021: (i) (ii) (iii) (iv) (v) The Third Amendment does not modify the royalties payable on sales of the Nucynta Products on and after January 1, 2022, which will remain as contemplated by the Nucynta Commercialization Agreement as in effect on January 9, 2018, based on the following royalty structure: (i) (ii) (iii) In addition, prior to January 1, 2022, if the annual net sales of the Nucynta Products are in the range of $180,000 to $243,000, the Company will be required to pay a supplemental royalty to Assertio, for ultimate payment to Grünenthal GmbH, not to exceed a maximum of 4.9% of net sales of the Nucynta Products. If annual net sales of Products are less than $180,000 in any 12-month period through January 1, 2022, or if they are less than $170,000 in any 12-month period commencing on January 1, 2022, then Assertio will have the right to terminate the Nucynta Commercialization Agreement without penalty. The Amendment further provides that the Company does not have a right to terminate the Nucynta Commercialization Agreement prior to December 31, 2021. The Company will be required to pay a $5,000 termination fee to Assertio in connection with any termination by the Company with an effective date between December 31, 2021 and December 31, 2022. In connection with execution of the Third Amendment to the Nucynta Commercialization Agreement, the Company issued a warrant to Assertio to purchase 1,041,667 shares of common stock of the Company (the “Warrant”) at an exercise price of $19.20 per share. The Warrant will expire in November 2022 and includes customary adjustments for changes in the Company’s capitalization. The assets acquired, liabilities assumed, and equity interests issued by the Company in connection with the Nucynta Commercialization Agreement are further described in Note 9. |
NET LOSS PER COMMON SHARE
NET LOSS PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2019 | |
NET LOSS PER COMMON SHARE | |
NET LOSS PER COMMON SHARE | 5. NET LOSS PER COMMON SHARE For the years ended December 31, 2019, 2018 and 2017, the following table presents the computations of basic and dilutive net loss per share: Years ended December 31, 2019 2018 2017 Net loss $ (22,722) $ (39,128) $ (74,865) Weighted-average number of common shares used in net loss per share - basic and diluted 33,453,844 32,953,808 30,265,262 Loss per share - basic and diluted $ (0.68) $ (1.19) $ (2.47) For the years ended December 31, 2019, 2018 and 2017, the following potentially dilutive securities outstanding have been excluded from the computations of diluted weighted-average shares outstanding because such securities have an antidilutive impact due to losses reported (in common stock equivalent shares): Years ended December 31, 2019 2018 2017 Stock options 3,955,887 3,585,856 3,037,690 Warrants 1,041,667 1,041,667 2,445 Unvested restricted stock (1) — 3,018 31,943 Restricted stock units 849,679 514,603 218,872 Performance share units 99,400 — — (1) - Includes shares of unvested restricted stock remaining from the early exercise of stock options. |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2019 | |
INVENTORY | |
INVENTORY | 6. INVENTORY Inventory consisted of the following: As of December 31, As of December 31, 2019 2018 Raw materials $ 795 $ 496 Work in process 1,427 671 Finished goods 7,421 6,650 Total inventory $ 9,643 $ 7,817 During the years ended December 31, 2019 and 2018, the aggregate charges to date related to excess inventory were immaterial. These expenses were recorded as a component of cost of product revenues. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 7. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following: As of December 31, 2019 2018 Prepaid regulatory fees $ 1,222 $ 3,035 Prepaid development costs 474 78 Prepaid insurance 414 340 Other prepaid expenses 854 655 Other current assets 141 1,008 Prepaid expenses and other current assets $ 3,105 $ 5,116 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | 8. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: As of December 31, 2019 2018 Computers and office equipment $ 1,453 $ 1,277 Laboratory equipment 1,220 1,613 Furniture and fixtures 1,066 1,111 Manufacturing equipment 987 — Leasehold improvements 541 567 Construction-in-process 8,875 6,543 Total property and equipment 14,142 11,111 Less: accumulated deprecation (2,288) (1,837) Property and equipment, net $ 11,854 $ 9,274 Depreciation expense related to property and equipment amounted to $731, $1,074 and $336 for the years ended December 31, 2019, 2018 and 2017, respectively. During the years ended December 31, 2019 and 2018, the Company disposed of fully depreciated assets of $280 and $905, respectively. During the year ended December 31, 2017, disposals were immaterial. The Company did not have any gains or losses from the retirement, sale or disposal of property and equipment during the years ended December 31, 2019, 2018, or 2017. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 9. INTANGIBLE ASSETS Nucynta Intangible Asset As of December 31, 2019 and 2018, the Company’s only intangible asset is related to the Nucynta Commercialization Agreement (“Nucynta Intangible Asset.”) The gross carrying amount and accumulated amortization of the Nucynta Intangible Asset were as follows: As of December 31, As of December 31, 2019 2018 Gross carrying amount $ 154,089 $ 154,089 Accumulated amortization (124,586) (109,834) Intangible assets, net $ 29,503 $ 44,255 The Company determined the Nucynta Commercialization Agreement should be accounted for as an asset acquisition in accordance with ASC Topic 805-50 , the sublicense of the Nucynta Products, which is a single identifiable asset. The Company concluded that the fair value estimates of the assets surrendered, liabilities incurred, and equity interests issued were more clearly evident than the fair value of the assets received, and therefore followed a cost accumulation model to determine the consideration transferred in the asset acquisition. The table below represents the costs accumulated during the year ended December 31, 2018 to acquire the sublicense of the Nucynta Products based on the terms of the Nucynta Commercialization Agreement, as amended: Acquisition consideration: Upfront cash paid $ 18,877 Minimum royalty payment obligation (1) 112,719 Rebates, incentives, trade allowances and chargebacks assumed 22,660 Warrant issued 8,043 Total acquisition consideration: $ 162,299 (1) Represents $132,000 of minimum royalty payments owed under the Nucynta Commercialization Agreement discounted for present value adjustments of $19,281 . The Company then allocated the consideration transferred to the individual assets acquired on a relative fair value basis as summarized in the table below: Assets acquired: Nucynta Intangible Asset $ 154,089 Inventory 6,223 Prepaid expenses 1,987 Total consideration allocated to assets acquired: $ 162,299 Under the original terms of the Nucynta Commercialization Agreement, the Company was obligated to make guaranteed annual minimum royalty payments of $537,000 to Assertio, which consisted of scheduled payments of $132,000 in 2018, $135,000 in 2019, $135,000 in 2020, and $135,000 in 2021. Due to the nature of the guaranteed minimum royalty payment obligation and the fact that it was required to be settled in cash, the Company determined that the future minimum royalty payments represented a liability that should be recorded at its fair value as of the Nucynta Commercialization Closing Date. The Company calculated the fair value of the future minimum royalty payments to be $482,300 using a discount rate of 5.7%. The discount rate was determined based on a review of observable market data relating to similar liabilities. The Company determined the $54,700 discount should be recognized as interest expense in the Statement of Operations using the effective interest method and over the repayment period from January 9, 2018 through December 2021. Prior to the Third Amendment to the Nucynta Commercialization Agreement in November 2018, the Company recognized interest expense of $19,281 relating to the minimum royalty payments and amortization expense of $107,662 related to the intangible asset. A summary of the costs included in the Nucynta Intangible Asset as of the acquisition date of January 9, 2018, is as follows: Costs included in Nucynta Intangible Asset: Upfront cash paid $ 10,000 Transaction costs 667 Minimum royalty payment obligation (1) 482,300 Rebates, incentives, trade allowances and chargebacks assumed (2) 22,660 Total cost: $ 515,627 (1) Represents $537,000 of minimum royalty payments owed under the Nucynta Commercialization Agreement discounted for present value adjustments of $54,700 . (2) Represents $22,660 of liabilities assumed related to sales of Nucynta Products that occurred prior to the closing date of January 9, 2018, for which the Company is liable under the terms of the Nucynta Commercialization Agreement. This assumed liability, representing $22,406 of assumed rebates and incentives and $254 of assumed trade allowances and chargebacks, was recorded as a component of the intangible asset acquired as part of the Nucynta Commercialization Agreement. Effective November 8, 2018 (the “Third Amendment Date”), the Company entered into the Third Amendment to the Nucynta Commercialization Agreement, which eliminated the guaranteed minimum royalty payment obligations for years 2019, 2020 and 2021. As a result, the Company remeasured the remaining contractual obligation as of the Third Amendment Date and recorded a reduction of the acquired intangible asset and obligation. As of December 31, 2018, the Company had paid all of the $132,000 of minimum royalty payment obligation owed under the Nucynta Commercialization Agreement for 2018. A summary of the gross carrying amount, accumulated amortization, and net book value of the Nucynta Intangible Asset from the acquisition date through December 31, 2018 is as follows: Gross Carrying Value Accumulated Amortization Net Book Value Intangible Asset, net Cost basis as of acquisition date $ 515,627 $ — $ 515,627 Amortization expense from acquisition date through Amendment Date — (107,662) (107,662) Adjustment due to the remeasurement of liability as of Amendment Date (369,581) — (369,581) Additional costs incurred as of Amendment Date (1) 8,043 — 8,043 Amortization expense from Amendment Date through fiscal year end — (2,172) (2,172) Balance as of December 31, 2018: $ 154,089 $ (109,834) $ 44,255 (1) Represents fair value of warrant issued in connection with the Amendment to the Nucynta Commercialization Agreement. Warrant In November 2018, in connection with the Third Amendment to the Nucynta Commercialization Agreement, the Company issued a warrant to Assertio to purchase 1,041,667 shares of common stock of the Company at an exercise price of $19.20 per share. The terms of the warrant are fixed, with the exception of customary adjustments for changes in the Company’s capitalization. The warrant may only be settled with the issuance of shares of common stock upon exercise and will expire in November 2022. The Company has recorded the relative fair value of the warrant as a component of equity interest issued by the Company as consideration transferred in the cost accumulation model for the asset acquisition. The Company estimated the fair value of the warrant on the date of issuance to be approximately $8,043 using the Black-Scholes option-pricing model. The Company concluded that the warrant met the definition of an equity instrument and was recorded as a component of additional paid-in capital in the Company’s Consolidated Balance Sheet as of the issuance date. Amortization The Company has been amortizing the Nucynta Intangible Asset over its useful life, which is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Company. The Company determined that the useful life for the intangible asset was approximately 4.0 years from the Nucynta Commercialization Closing Date. The Company recognizes amortization expense as a component of cost of product revenues in the Statement of Operations on a straight-line basis over its useful life as it approximates the period of economic benefits expected to be realized from future cash inflows from sales of the Nucynta Products. Prior to the Third Amendment to the Nucynta Commercialization Agreement, the Company had recognized $107,662 of amortization expense. As the accumulated cost basis of the intangible asset was reduced with the Third Amendment to the Nucynta Commercialization Agreement, the Company will continue to prospectively amortize the residual net intangible asset on a straight-line basis over the remaining useful life. For the years ended December 31, 2019 and 2018, the Company recognized amortization expense of $14,752 and $109,834 , respectively. As of December 31, 2019, the remaining amortization period is approximately 2.0 years and estimated amortization for 2020 and 2021 is expected to be $14,752 and $14,751 , respectively. Onsolis Intangible Asset In May 2016, the Company entered into an agreement with BDSI to license the rights to develop, manufacture, and commercialize Onsolis, in the United States. During the year ended December 31, 2016, the Company made an upfront payment of $2,500 and recorded the payment as a component of intangible assets (the “Onsolis Intangible Asset”). On December 8, 2017, the Company, after a review of its product portfolio, provided written notice to BDSI of termination of the License and Development Agreement. The termination was effective pursuant to the terms of such agreement on March 8, 2018, and the Company’s rights to develop and commercialize Onsolis reverted to BDSI. As a result of this notice of termination, the Company determined that the carrying amount of the intangible asset was not recoverable and that the carrying amount exceeded its fair value. As such, an impairment loss of $1,845 was recognized and included as a component of sales, general and administrative expense during the year ended December 31, 2017 and the net intangible asset is zero as of the years ended December 31, 2019, 2018 and 2017. For the year ended December 31, 2017 the Company recognized amortization expense relating to the Onsolis Intangible Asset of $258 . |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2019 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | 10. ACCRUED EXPENSES Accrued expenses consisted of the following: As of December 31, As of December 31, 2019 2018 Accrued royalties $ 21,893 $ 15,138 Accrued bonuses 4,047 4,286 Accrued incentive compensation 1,650 1,806 Accrued payroll and related benefits 1,154 1,544 Accrued sales and marketing 775 2,193 Accrued interest 473 274 Accrued audit and legal 308 480 Accrued inventory — 3,745 Accrued other operating costs 3,180 1,085 Total accrued expenses $ 33,480 $ 30,551 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, the Company may face legal claims or actions in the normal course of business. Except as disclosed below, the Company is not currently a party to any litigation and, accordingly, does not have any amounts recorded for any litigation related matters. Xtampza ER Litigation The Company filed the NDA for Xtampza ER as a 505(b)(2) application, which allows the Company to reference data from an approved drug listed in the FDA’s Orange Book, in this case OxyContin. The 505(b)(2) process requires that the Company certifies to the FDA and notify Purdue Pharma, L.P (“Purdue”), as the holder of the NDA and any other Orange Book-listed patent owners, that the Company does not infringe any of the patents listed for OxyContin in the Orange Book, or that the patents are invalid. The Company made such certification and provided such notice on February 11, 2015 and such certification documented why Xtampza ER does not infringe any of the 11 Orange Book listed patents for OxyContin, five of which have been invalidated in court proceedings. Under the Hatch-Waxman Act of 1984, Purdue had the option to sue the Company for infringement and receive a stay of up to 30 months before the FDA could issue a final approval for Xtampza ER, unless the stay was earlier terminated. Purdue exercised its option and elected to sue the Company for infringement in the District of Delaware on March 24, 2015 asserting infringement of three of Purdue’s Orange Book-listed patents (Patent Nos. 7,674,799, 7,674,800, and 7,683,072) and a non-Orange Book-listed patent (Patent No. 8,652,497), and accordingly, received a 30-month stay of FDA approval. The Delaware court transferred the case to the District of Massachusetts. After the Company filed a partial motion for judgment on the pleadings relating to the Orange Book-listed patents, the District Court of Massachusetts ordered judgment in the Company’s favor on those three patents, and dismissed the claims asserting infringement of those patents with prejudice. Upon dismissal of those claims, the 30-month stay of FDA approval was lifted. As a result, the Company was able to obtain final approval for Xtampza ER and launch the product commercially. In November 2015, Purdue filed a follow-on suit asserting infringement of another patent, Patent No. 9,073,933, which was late-listed in the Orange Book and therefore could not trigger any stay of FDA approval. In June 2016, Purdue filed another follow-on suit asserting infringement of another non-Orange Book listed patent, Patent No. 9,155,717. In April 2017, Purdue filed another follow-on suit asserting infringement of another patent, Patent No. 9,522,919, which was late-listed in the Orange Book and therefore could not trigger any stay of FDA approval. Then, in September 2017, Purdue filed another follow-on suit asserting infringement of another non-Orange Book listed patent, Patent No. 9,693,961. On March 13, 2018, the Company filed a Petition for Post-Grant Review (“PGR”) of the ʼ961 patent with the Patent Trial and Appeal Board (“PTAB”). The PGR argues that the ʼ961 patent is invalid for lack of a written description, for lack of enablement, for indefiniteness, and as being anticipated by prior art. Purdue filed its Patent Owner Preliminary Response on July 10, 2018. The PTAB entered an order to institute post-grant review of all claims of the ’961 patent on October 4, 2018, upon a finding that it is more likely than not that the claims of the ʼ961 patent are unpatentable. Purdue filed its Patent Owner Response on January 30, 2019. The Company filed its reply on April 12, 2019, and Purdue filed a sur-reply on May 10, 2019. The PTAB held oral argument on the proceedings on July 10, 2019 and was scheduled to issue a decision on the patentability of the ʼ961 patent by no later than October 4, 2019. On September 15, 2019, Purdue commenced a voluntary case under chapter 11 of title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. On September 24, 2019, Purdue gave the PTAB notice of its bankruptcy filing and sought the imposition of an automatic stay of the PGR proceedings. On October 2, 2019, the PTAB extended the one-year period for issuing its decision by up to six months. In October 2017, and in response to the filing of the Company’s Supplemental NDA (“sNDA”) seeking to update the drug abuse and dependence section of the Xtampza ER label, Purdue filed another suit asserting infringement of the ʼ933 and ʼ919 patent. The Company filed a motion to dismiss that action, and the Court granted its motion on January 16, 2018. The suits that remain pending have been consolidated by the District of Massachusetts. The Court issued an order on September 28, 2018 in which it granted in part a motion for summary judgment that the Company filed, in which the Court ruled that the Xtampza ER formulation does not infringe the ‘497 and ʼ717 patents. As a result, only the ʼ933, the ʼ919, and the ʼ961 patents remain in dispute. On October 16, 2018, the Company filed a motion to stay proceedings in the district court on the ‘961 patent pending the PGR. Purdue has made a demand for monetary relief but has not quantified its alleged damages. Purdue has also requested a judgment of infringement, an adjustment of the effective date of FDA approval, and an injunction on the sale of the Company’s products accused of infringement. The Company has denied all claims and have requested a judgment that the remaining asserted patents are invalid and/or not infringed; the Company is also seeking a judgment that the case is exceptional and have requested an award of the Company’s attorneys’ fees for defending the case. A claim construction hearing was held on June 1, 2017. On November 21, 2017, the Court issued its claim construction ruling, construing certain claims of the ʼ933, ʼ497, and ʼ717 patents. No trial date has been scheduled. On September 18, 2019, Purdue gave the Court notice of its bankruptcy filing and sought the imposition of an automatic stay of the proceedings. On September 20, the matter was stayed pending further order of the Court. Once the stay is lifted, the Company plans to defend this case vigorously. At this stage, the Company is unable to evaluate the likelihood of an unfavorable outcome or estimate the amount or range of potential loss, if any. Nucynta Litigation On February 7, 2018, Purdue filed a patent infringement suit against the Company in the District of Delaware. Specifically, Purdue argues that the Company’s sale of immediate-release and extended-release Nucynta infringes U.S. Patent Nos. 9,861,583, 9,867,784, and 9,872,836. Purdue has made a demand for monetary relief in its complaint but has not quantified its alleged damages. On December 6, 2018, the Company filed an Amended Answer asserting an affirmative defense for patent exhaustion. On December 10, 2018, the Court granted the parties’ stipulation for resolution of the Company’s affirmative defense of patent exhaustion and stayed the action, with the exception of briefing on and resolution of the Company’s Motion for Judgment on the Pleadings related to patent exhaustion and any discovery related to that Motion. Also, on December 10, 2018, the Company filed a Rule 12(c) Motion for Judgment on the Pleadings, arguing that the Purdue’s claims were barred by the doctrine of patent exhaustion. Purdue filed its response on January 11, 2019 and the Company filed a reply on January 25, 2019. On June 18, 2019, the Court heard oral argument on the Company’s Rule 12(c) Motion for Judgment on the Pleadings. On June 19, 2019, the Court issued an order stating that “judgment in Collegium’s favor is warranted under the doctrine of patent exhaustion to the extent Collegium’s alleged infringing activities resulted from sales that fall within the scope of that covenant.” The Court explained, however, that based on the current record, it was not possible “to determine whether title of the Nucynta Products was transferred to Collegium” from sales authorized by Purdue’s covenant not to sue. The Court ordered discovery on this issue and the case remained “stayed with the exception of discovery and briefing on and resolution of the Company’s anticipated motion for summary judgment based on patent exhaustion.” On September 19, 2019, Purdue gave the Court notice of its bankruptcy filing and sought the imposition of an automatic stay of the proceedings. The Nucynta litigation is subject to the automatic bankruptcy stay. Pending resolution of the bankruptcy action, the Company plans to defend this case vigorously. At this stage, the Company is unable to evaluate the likelihood of an unfavorable outcome or estimate the amount or range of potential loss, if any. Teva Litigation Presently, the Company has seventeen patents listed in the FDA Orange Book as covering the Company’s abuse-deterrent product and methods of using it to treat patients: Patents Nos. 7,399,488; 7,771,707; 8,449,909; 8,557,291; 8,758,813; 8,840,928; 9,044,398; 9,248,195; 9,592,200; 9,682,075; 9,737,530, 9,763,883; 9,968,598; 10,004,729; 10,188,644; 10,525,052; and 10,525,053 (the “Orange Book Patents”). Teva filed an ANDA seeking FDA approval to market generic extended-release oxycodone capsule products (the “proposed ANDA products”). Teva also filed certifications with the FDA that its proposed ANDA products will not infringe the Orange Book Patents and/or that the Orange Book Patents are invalid. Teva sent the Company a Notice Letter indicating that it had made such certification to the FDA. On February 22, 2018—within the 45-day period that gives the Company a 30-month stay of FDA approval of Teva’s ANDA while the parties have an opportunity to litigate—the Company sued Teva in the District of Delaware on eleven of the twelve Orange Book Patents that were listed at that time. Teva responded to the complaint on May 14, 2018, denying infringement by Teva’s proposed ANDA products and asserting counterclaims of non-infringement and invalidity of the asserted patents. The Company answered Teva’s counterclaims on June 4, 2018. The Company listed two additional patents in the Orange Book in 2018 and Teva amended its ANDA to include certifications to the FDA of non-infringement and invalidity with respect to those patents. Teva notified the Company of its certification and the Company filed a second lawsuit in the District of Delaware, asserting those two patents, on November 30, 2018. Teva responded to the complaint on January 11, 2019 denying infringement by Teva’s proposed ANDA products, and asserting counterclaims of non-infringement and invalidity of the asserted patents. The Company answered Teva’s counterclaims on February 1, 2019. The court consolidated the second suit with the first suit, and thus both suits are proceeding on the same schedule. The parties briefed claim construction and the court heard argument on April 12, 2019. On September 11, 2019, the Court issued a Report and Recommendation construing two of the six terms or sets of terms that are in dispute. The remaining terms will be addressed in one or more forthcoming Report and Recommendations. Fact discovery was scheduled to close on September 20, 2019 and expert discovery was scheduled to close on January 24, 2020. The Company listed an additional patent in the Orange Book in January 2019 and Teva amended its ANDA to include certifications to the FDA of non-infringement and invalidity with respect to that patent. Teva notified us of its certification and the Company filed a third lawsuit in the District of Delaware, asserting the additional Orange Book Patent, on May 9, 2019. Teva responded to the complaint on June 6, 2019, denying infringement by Teva’s proposed ANDA products, and asserting counterclaims of non-infringement and invalidity of the asserted patent. The Company answered Teva’s counterclaims on June 27, 2019. The parties filed a proposed Scheduling Order, which the Court entered on September 4, 2019. The parties have exchanged initial disclosures pursuant to that Order. On September 20, 2019, the parties jointly agreed to stay both litigations, which the Court so ordered. Once the district Court lifts the stay, the Company plans to continue pursuing this case vigorously. The Company listed two additional patents in the Orange Book in January 2020, which brings the total number of Orange Book Patents for Xtampza ER to seventeen. Opioid Litigation On March 19, 2018, a lawsuit was filed by multiple local governments in the Circuit Court of Crittenden County, Arkansas, against the Company and other pharmaceutical manufacturers and distributors alleging a variety of claims related to opioid marketing and distribution practices. On January 29, 2019, the Company was dismissed from this litigation without prejudice. On March 21, 2018, the Company, along with other pharmaceutical manufacturers and distributors, were named in a class-action lawsuit filed in the Eastern District of Kentucky by a family practice clinic, on behalf of other similarly-situated healthcare providers. The action alleges violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) relating to opioid marketing and distribution practices. On April 14, 2018, the lawsuit was conditionally transferred by the Judicial Panel on Multi-District Litigation to the federal Prescription Opiate Multi District Litigation (the “MDL”) in the Southern District of Ohio. On April 10, 2018, the conditional transfer was finalized, and the lawsuit was docketed in the MDL on April 11, 2018. On May 4, 2018, the Company, along with other pharmaceutical manufacturers and distributors, were named in two lawsuits filed in the MDL by the Fiscal Court of Bourbon County, Kentucky and the Fiscal Court of Owen County, Kentucky, relating to opioid marketing and distribution practices. On July 11 and 12, 2018, the Company was named in four lawsuits filed in the MDL by a health system and various member hospitals. On September 26, 2018, the Company was named in two lawsuits filed in the MDL by the Fiscal Court of Lee County, Kentucky and the Fiscal Court of Wolfe County, Kentucky. On March 15, 2019, the plaintiffs in these MDL cases filed amended complaints which no longer name the Company as a defendant, effectively terminating these lawsuits as to the Company. On September 6, 2019, Triad Health Systems filed a class action lawsuit in the MDL on behalf of itself and similarly situated health care systems, generally alleging negligence, fraud, and violations of the RICO Act relating to opioid marketing and distribution practices, naming the Company and other pharmaceutical distributors and manufacturers. On October 18, 2019, three counties in Kentucky filed lawsuits in the MDL naming the Company: the Fiscal Court of Casey County Kentucky; the Fiscal Court of Gallatin County Kentucky; and the Fiscal Court of Lewis County Kentucky. These three lawsuits generally allege negligence, fraud, and violations of the RICO Act relating to opioid marketing and distribution practices. The Company was dismissed from these four lawsuits on November 6, 2019. On January 11, 2019, the City of Portsmouth filed a lawsuit in Virginia Circuit Court against the Company and other pharmaceutical manufacturers and distributors. The lawsuit alleges a variety of claims related to opioid marketing and distribution practices including public nuisance, common law fraud, negligent misrepresentation, negligence, and violations of state consumer protection laws. On October 3, 2019, the City of Portsmouth case was transferred to the MDL. On March 15, 2019, the Company was named in a lawsuit in the MDL by the City of Paterson, New Jersey. The lawsuit that alleges violations of fraud, public nuisance, negligent misrepresentation, and violations of state consumer protection laws, and seeks, generally, penalties and/or injunctive relief. In April 2019, the City of Norwich, Connecticut and the Town of Enfield, Connecticut filed lawsuits that name the Company in Connecticut Superior Court. The lawsuits allege violations of fraud, public nuisance, negligent misrepresentation, and violations of state consumer protection laws. On June 28, 2019, both cases were transferred to the MDL. In October 2019, the Company was named in two additional Connecticut lawsuits: the City of Middletown and the Town of Wethersfield. These cases were both also transferred to the MDL in July 2019. On June 14, 2019, the City of Trenton filed a lawsuit in the New Jersey Superior Court against the Company and other pharmaceutical manufacturers and distributors. The lawsuit alleges a variety of claims related to opioid marketing and distribution practices including public nuisance, common law fraud, negligent misrepresentation, negligence, and violations of state consumer protection laws and the New Jersey Drug Dealer Liability Act. On August 23, 2019, the case was removed to the District Court of New Jersey. The plaintiff filed an opposition to coordination and requested remand, but on December 18, 2019, the case was transferred to the MDL. Each of the lawsuits in the MDL naming the Company seeks, generally, penalties and injunctive relief. None of the lawsuits naming the Company are designated as representative cases in the MDL, and therefore, are effectively currently stayed. On May 29, 2018, a lawsuit was filed by Bucks County, Pennsylvania against the Company and other pharmaceutical manufacturers and on June 12, 2018, a lawsuit was filed by Clinton County, Pennsylvania, against the Company and other pharmaceutical manufacturers and distributors. On June 6, 2018, a lawsuit was filed by Mercer County, Pennsylvania, against the Company and other pharmaceutical manufacturers and distributors. These lawsuits allege claims related to opioid marketing and distribution, including negligence, fraud, unjust enrichment, public nuisance, and violations of state consumer protections laws. These cases have been consolidated for discovery purposes in the Delaware County Court of Common Pleas as part of a consolidated proceeding of similar lawsuits brought by numerous Pennsylvania counties against other pharmaceutical manufacturers and distributors. In March 2019, three additional cases were filed in Pennsylvania by two payor groups and Warminster Township. The Company has been dismissed from both of the payor group cases. In July 2019, the Company learned of additional lawsuits alleging similar claims which were filed by Warrington Township in the Bucks County Court of Common Pleas, and filed by the City of Lock Haven in the Clinton County Court of Common Pleas. The City of Lock Haven and the Warrington Township cases have been coordinated into the consolidated proceeding before the Delaware County Court of Common Pleas. None of these cases have been designated a Track One case in which discovery would commence, and therefore are effectively stayed at present. On July 30, 2018, a lawsuit was filed by the City of Worcester, Massachusetts against the Company and other pharmaceutical manufacturers and distributors. The action alleges a variety of claims related to opioid marketing and distribution practices including public nuisance, common law fraud, negligent misrepresentation, negligence, violations of Mass Gen. Laws ch. 93A, Section 11 case was transferred to the Business Litigation Session of the Superior Court. Additional lawsuits brought by the following cities and counties Massachusetts were filed between October 2018 and April 2019: City of Salem, City of Framingham, Town of Lynnfield, City of Springfield, City of Haverhill, City of Gloucester, Town of Canton, Town of Wakefield, City of Chicopee; Town of Natick; City of Cambridge, and Town of Randolph. Each of these additional lawsuits has been coordinated before the Business Litigation Session. The case brought by the City of Springfield was selected to advance for the purpose of motion practice, defendants’ motions to dismiss were denied on January 3, 2020. There is currently no schedule for the next stage of the proceedings. The Company disputes the allegations in these lawsuits and intends to vigorously defend these actions. At this stage, the Company is unable to evaluate the likelihood of an unfavorable outcome or estimate the amount or range of potential loss, if any. Opioid-Related Request and Subpoenas The Company, like a number of other pharmaceutical companies, has received subpoenas or civil investigative demands related to opioid sales and marketing. The Company has received such subpoenas or civil investigative demands from the Offices of the Attorney General of each of Washington, New Hampshire, and Massachusetts. The Company is currently cooperating with each of the foregoing states in their respective investigations. |
TERM LOAN PAYABLE
TERM LOAN PAYABLE | 12 Months Ended |
Dec. 31, 2019 | |
TERM LOAN PAYABLE | |
TERM LOAN PAYABLE | 12. TERM LOAN PAYABLE On August 28, 2012, the Company entered into a loan agreement with Silicon Valley Bank (“SVB”) to borrow up to a maximum amount of $1,000. The loan agreement was subsequently amended in 2014 and 2015 to provide for additional borrowings (as amended, the “Existing Term Loan”). In January 2018, in connection with, and as a condition to, consummation of the transactions contemplated by the Nucynta Commercialization Agreement with Assertio, the Company entered into a Consent and Amendment to Loan and Security Agreement (the “Consent and Amendment”) with SVB to amend the Existing Term Loan. The Consent and Amendment provided the Company with a new term loan facility in an original principal amount of $11,500, which replaced the Existing Term Loan and the proceeds of which were used by the Company to finance certain payment obligations under the Nucynta Commercialization Agreement and to repay the balance of the Existing Term Loan. The Existing Term Loan also provided SVB’s consent with respect to the Nucynta Commercialization Agreement. The Consent and Amendment bears interest at a rate per annum of 0.75% above the prime rate (as defined in the Consent and Amendment). The Company will repay the Consent and Amendment in equal consecutive monthly installments of principal plus monthly payments of accrued interest, commencing in January 2020. All outstanding principal and accrued and unpaid interest under the Consent and Amendment, and all other outstanding obligations with respect to the Consent and Amendment, are due and payable in full in December 2022. The Company may prepay the Consent and Amendment, in full but not in part, with a prepayment fee of (i) 3.0% of the outstanding principal balance prior to the first anniversary of the Consent and Amendment, (ii) 2.0% of the outstanding principal balance following the first anniversary of the Consent and Amendment and prior to the second anniversary of the Consent and Amendment and (iii) 1.0% of the outstanding principal balance following the second anniversary of the Consent and Amendment, plus, in each case, a final payment fee of $719. In November 2018, the Company entered into an amended and restated Loan and Security Agreement (“Amended Term Loan”) with SVB, that supersedes the Company’s original loan agreement and subsequent amendments with SVB. The Amended Term Loan amended and restated the loan documentation between the Company and SVB and modified the minimum liquidity ratio to be at least 1.5 to 1.0 (as defined in the Amended Term Loan), along with other non-material changes. The Amended Term Loan did not modify the Company’s borrowings, interest rates, or repayment terms. Any amounts outstanding during the continuance of any event of default under the Consent and Amendment will bear additional interest at the per annum rate of 5.0%. As of December 31, 2019, scheduled principle repayments under the Company’s Amended Term Loan are as follows: 2020 $ 3,833 2021 3,833 2022 3,834 Balance $ 11,500 In February 2020, the Company prepaid its outstanding loan balance with SVB in full, including the final prepayment fee. Refer to Note 19 for further detail. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
LEASES | 13. LEASES In accordance with ASC Topic 842, Lease Accounting, the Company records lease assets and liabilities for lease arrangements exceeding a 12-month initial term. For operating leases, the Company records a beginning lease liability equal to the present value of minimum lease payments to be made over the lease term discounted using the Company’s incremental borrowing rate and a corresponding lease asset adjusted for incentives received and indirect costs. After lease commencement, the Company remeasures the operating liability at the present value of the remaining lease payments discounted using the original incremental borrowing rate and corresponding lease asset adjusted for incentives received, indirect costs and uneven lease payments. T in the Statements of Operations Variable lease costs are not included in the measurement of the operating lease liability and are recognized in the period in which they are incurred. Leases with an initial term of 12 months or less, or short-term leases, are not recorded on the balance sheet. Short-term lease expense is recognized on a straight-line basis over the lease term. The Company does not have any financing lease arrangements. As of December 31, 2019, the Company had operating lease assets of $9,047 and operating lease liabilities of $10,094 primarily related to operating lease agreements for its corporate headquarters. Operating Lease Arrangements In March 2018, the Company entered into an operating lease for its new corporate headquarters (the “Stoughton Lease”) pursuant to which the Company leases approximately 50,678 of rentable square feet of space, in Stoughton, Massachusetts. The Stoughton Lease commenced in August 2018 when the Company took possession of the space. After the initial four-month free rent period following possession of the space, the operating lease will continue for a term of 10 years. The Company has the right to extend the term of the Stoughton Lease for two additional five-year terms, provided that written notice is provided to the landlord no later than 12 months prior to the expiration of the then current Stoughton Lease term. The Company does not believe the exercise of the extension to be reasonably certain as of the balance sheet date and therefore did not include the extension as part of its recognized lease asset and lease liability. The annual base rent is $1,214, or $23.95 per rentable square foot, and will increase annually by 2.5% to 3.1% over the subsequent years. In September 2019, the Company determined it had ceased use of its lease for the remaining 9,660 square feet at its impaired the o In December 2019, the Company terminated the Canton Lease and the operating lease liability was reduced to zero . In January 2016, the Company entered a non-cancellable contract with the contract manufacturing organization (“CMO”) of Xtampza ER. The initial contract term continues through December 2020 and automatically renews for successive two-year terms unless either party gives written notice of termination two-years in advance. Xtampza ER production is currently conducted in an area of the manufacturing plant that is shared with other clients. Pursuant to the terms of the agreement, since 2016 the CMO has reserved 3,267 square feet of existing manufacturing space for a dedicated production suite for Xtampza ER, which is currently under construction. Upon adoption of ASC Topic 842, the Company determined that this arrangement has an embedded operating lease arrangement as the Company can direct the use of the dedicated space and obtain substantially all the economic benefits. The Company expects the lease term to continue at least through December 2026 and separated the agreement’s lease and non-lease components in determining the operating lease assets and liabilities. The Company determined its best estimate of stand-alone prices for each of the lease and nonlease components by considering observable information including gross margins expected to be recovered from the Company’s service provider and terms of similar lease contracts. Short-Term Lease Arrangements In December 2018, the Company began entering into 12-month, non-cancelable vehicle leases for its field-based employees. Each vehicle lease is executed separately and expires at varying times with automatic renewal options that are cancelable at any time. The rent expense for these leases is therefore recognized on a straight-line basis over the lease term in the period in which it is incurred. Variable Lease Costs Variable lease costs associated with non-lease components primarily include utilities, property taxes, and other operating costs that are passed on from the lessor. The components of lease cost for the year ended December 31, 2019 are as follows: Year ended December 31, 2019 Lease Cost Operating lease cost $ 1,446 Short-term lease cost 752 Variable lease cost 283 Total lease cost $ 2,481 The lease term and discount rate for operating leases for the year ended December 31, 2019 are as follows: As of December 31, Lease Term and Discount Rate: 2019 Weighted-average remaining lease term — operating leases (years) 9.6 Weighted-average discount rate — operating leases 6.1% Other information related to operating leases for the year ended December 31, 2019 is as follows: Year ended December 31, Other Information: 2019 Cash paid for amounts included in the measurement of operating leases liabilities $ 1,133 Leased assets obtained in exchange for new operating lease liabilities — Under ASC Topic 842, the Company’s aggregate future minimum lease payments for its operating leases, including embedded operating lease arrangements, as of December 31, 2019, are as follows: 2020 $ 1,252 2021 1,290 2022 1,328 2023 1,366 2024 1,404 After 2024 6,858 Total minimum lease payments $ 13,498 Less: Present value discount 3,404 Present value of lease liabilities $ 10,094 Under legacy GAAP, the Company’s aggregate future minimum lease payments for its operating leases as of December 31, 2018 were as follows: 2019 $ 1,032 2020 1,305 2021 1,261 2022 1,299 2023 1,337 After 2023 8,423 Total minimum lease payments $ 14,657 |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
EQUITY | |
EQUITY | 14. EQUITY Common Stock As of December 31, 2019 and 2018, the Company had reserved the following shares of common stock for the issuance of shares upon the exercise of stock options and warrants and the issuance of shares under the 2015 Employee Stock Purchase Plan: As of December 31, 2019 2018 Options to purchase common stock 5,105,980 4,710,771 Employee stock purchase plan 1,046,568 788,053 Warrants 1,041,667 1,041,667 Total 7,194,215 6,540,491 Controlled Equity Offering Sales Agreement In March 2017, the Company entered into a Controlled Equity Offering Sales Agreement (the “ATM Sales Agreement”), with Cantor Fitzgerald & Co., as sales agent (“Cantor Fitzgerald”), pursuant to which the Company may issue and sell, from time to time, through Cantor Fitzgerald, shares of the Company’s common stock, up to an aggregate offering price of $60,000 (the “ATM Shares”). Warrants As of December 31, 2019, the warrant issued to Assertio in November 2018 was the Company’s only outstanding warrant, which is described in greater detail in Note 9. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
STOCK BASED COMPENSATION | |
STOCK BASED COMPENSATION | 15. STOCK-BASED COMPENSATION Stock Options, Restricted Stock Units and Performance Share Units In May 2015, the Company adopted the Amended and Restated 2014 Stock Incentive Plan (the “Plan”), under which an aggregate of 2,700,000 shares of common stock were authorized for issuance to employees, officers, directors, consultants and advisors of the Company, plus an annual increase to be added on the first day of each fiscal year until the expiration of the Plan equal to 4% of the total number of outstanding shares of common stock on December 31 st st one In June 2018, the Company’s board of directors approved a modification to the former President and Chief Executive Officer’s equity-based awards to provide that all of those awards, to the extent unvested as of the Company’s 2020 annual meeting of shareholders, will vest on such date, subject to his continued service on the Company’s board of directors through such date. This modification was effective on June 4, 2018 and affected 116,250 shares of non-vested restricted stock units and 225,625 unvested stock options to purchase the Company’s common stock. The Company accounted for this modification under ASC 718, and, per guidance, determined the modification did not create incremental value as the fair value of these awards was unchanged. The shorter requisite service period will result in the accelerated recognition of stock-based compensation expense through 2020. In January 2019, the Company granted performance share units (“PSUs”) to certain members of the Company's senior management team. The PSUs will vest following a three-year performance period, subject to the satisfaction of annual and cumulative performance criteria and the executive’s continued employment through the performance period. No shares will be issued if the minimum applicable performance metric is not achieved. The Company recognizes compensation expense ratably over the required service period based on its estimate of the number of shares that will vest based upon the probability of achieving performance metrics. If there is a change in the estimate of the number of shares that are likely to vest, the Company will cumulatively adjust compensation expense in the period that the change in estimate is made. Achievement of the annual and cumulative performance criteria for PSU grants will be determined by the Compensation Committee. For PSUs granted in 2019, the performance criteria relate to Xtampza ER 2019, 2020, 2021 and three-year cumulative revenue goals. The expense for the year ended December 31, 2019 was $136. A summary of the Company’s performance share units activity for the year ended December 31, 2019 and related information is as follows: Weighted-Average Shares Grant Date Fair Value Outstanding at December 31, 2018 — $ — Granted 99,400 15.90 Outstanding at December 31, 2019 99,400 $ 15.90 The weighted-average grant date fair value of PSUs granted for the year ended December 31, 2019 was $15.90. There were no PSUs that vested during the year ended December 31, 2019. As of December 31, 2019, the unrecognized compensation cost related to performance share units was $272 and is expected to be recognized as expense over approximately 2.1 years. A summary of the Company’s restricted stock units activity for the year ended December 31, 2019 and related information is as follows: Weighted-Average Shares Grant Date Fair Value Outstanding at December 31, 2018 514,603 $ 20.67 Granted 634,708 15.48 Vested (196,139) 20.73 Forfeited (103,493) 18.04 Outstanding at December 31, 2019 849,679 $ 17.10 The weighted-average grant date fair value of RSUs granted for the years ended December 31, 2019, 2018, and 2017 was $15.48, $23.41 and $12.45. The total fair value of RSUs vested (measured on the date of vesting) for the years ended December 31, 2019, 2018, and 2017 was $2,683, $1,782 and $210 respectively. As of December 31, 2019, the unrecognized compensation cost related to restricted stock units was $10,189 and is expected to be recognized as expense over approximately 2.6 years. The fair value of restricted stock units vested during the year ended December 31, 2019 was $4,066. A summary of the Company’s stock option activity for the year ended December 31, 2019 and related information is as follows: Weighted- Weighted- Average Average Remaining Aggregate Exercise Price Contractual Intrinsic Shares per Share Term (in years) Value Outstanding at December 31, 2018 3,585,856 $ 16.20 8.0 $ 11,170 Granted 1,095,908 15.22 Exercised (201,308) 10.16 Cancelled (524,569) 18.00 Outstanding at December 31, 2019 3,955,887 $ 16.00 7.5 $ 21,257 Exercisable at December 31, 2019 2,094,720 $ 15.05 6.6 $ 13,020 The weighted-average grant date fair value of stock options granted for the years ended December 31, 2019, 2018, and 2017 was $9.07, $14.51, and $7.86 respectively. The total intrinsic value of stock options exercised for the years ended December 31, 2019, 2018, and 2017 was $1,506, $3,970, and $1,100 respectively. As of December 31, 2019, the unrecognized compensation cost related to outstanding options was $15,603 and is expected to be recognized as expense over approximately 2.5 years. Employee Stock Purchase Plan The Company’s 2015 Employee Stock Purchase Plan allows employees as designated by the Company’s Board of Directors to purchase shares of the Company’s common stock. The purchase price is equal to 85% of the lower of the closing price of the Company’s common stock on (1) the first day of the purchase period or (2) the last day of the purchase period. During the year ended December 31, 2019, 74,142 shares of common stock were purchased for total proceeds of $817. The expense for the years ended December 31, 2019, 2018 and 2017 was $358, $493 and $380, respectively. Stock-Based Compensation Expense The Company granted stock options to employees for the years ended December 31, 2019, 2018 and 2017. The Company estimates the fair value of stock options as of the date of grant using the Black-Scholes option pricing model and restricted stock awards and restricted stock units based on the fair value of the award. Stock-based compensation for all stock options, restricted stock awards, restricted stock units and for the employee stock purchase plan are reported within: Year Ended December 31, 2019 2018 2017 Research and development expenses $ 2,126 $ 1,468 $ 888 Selling, general and administrative expenses 14,402 12,310 7,057 Total stock-based compensation expense $ 16,528 $ 13,778 $ 7,945 The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows: Year ended December 31, 2019 2018 2017 Risk-free interest rate 2.4 % 2.6 % 2.0 % Volatility 63.3 % 64.8 % 71.0 % Expected term (years) 6.1 6.1 6.0 Expected dividend yield — % — % — % Risk-free Interest Rate. Expected Volatility. Expected Term. Expected Dividend Yield. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | 16. INCOME TAXES For the years ended December 31, 2019, 2018, and 2017, the Company did not record a current or deferred income tax expense or (benefit) due to current and historical losses incurred by the Company. The Company's losses before income taxes consist solely of losses from domestic operations. The enactment of the Tax Cuts and Jobs Act (TCJA) As of December 31, 2019 2018 2017 Federal income tax expense at statutory rate 21.00 % 21.00 % 34.00 % (Increase) decrease income tax (benefit) resulting from: State income tax, net of federal benefit 5.59 5.89 3.93 Permanent differences (3.24) (2.51) (2.49) U.S. - TCJA — — (43.32) Research and development credit 1.83 0.52 0.53 Change in valuation allowance (25.18) (24.90) 7.35 Effective income tax rate 0.00 % 0.00 % 0.00 % Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets and liabilities are comprised of the following: As of December 31, 2019 2018 Deferred tax assets: U.S. and state net operating loss carryforwards $ 66,553 $ 82,501 Research and development credits 3,768 4,364 Operating lease liabilities 2,630 — Operating lease assets (2,357) — Accruals and other (1) 14,286 4,676 Depreciation and amortization 92 269 Total deferred tax assets 84,972 91,810 Valuation allowance (77,285) (80,290) Deferred tax assets after valuation allowance 7,687 11,520 Deferred tax liabilities – intangible assets (7,687) (11,520) Net deferred tax assets $ — $ — (1) Balance includes $5,796 and $3,137 of accruals related to stock-based compensation expense as of December 31, 2019 and 2018, respectively. Balance also includes $7,204 and $0 of accrued rebates, returns, and discounts as of December 31, 2019 and 2018, respectively. The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. As of December 31, 2019, and December 31, 2018, based on the Company's history of operating losses, the Company has concluded that it is not more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2019 and December 31, 2018. The valuation allowance decreased $3,005 during the year ended December 31, 2019 due primarily to the expected utilization of its net operating losses in 2019 as well as limitations caused by ownership changes under the provisions of Internal Revenue Code Section 382. As of December 31, 2019, 2018, and 2017, the Company had gross U.S. federal net operating loss carryforwards of $292,342, $324,533, and $249,511, respectively, which may be available to offset future income tax liabilities. TCJA will generally allow losses incurred after 2017 to be carried over indefinitely but will generally limit the NOL deduction to the lesser of the NOL carryover or 80% of a corporation’s taxable income (subject to Internal Revenue Code Sections 382 and 383). Also, there will be no carryback for losses incurred after 2017. Losses incurred prior to 2018 will generally be deductible to the extent of the lesser of a corporation’s NOL carryover or 100% of a corporation’s taxable income (subject to Internal Revenue Code Section 382 and 383) and be available for twenty years from the period the loss was generated. As of December 31, 2019, 2018, and 2017, the Company also had gross U.S. state net operating loss carryforwards of $222,629, $285,181, and $205,074, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2038. As of December 31, 2019, 2018 and 2017, the Company had federal research and development tax credit carryforwards of approximately $4,044, $3,628, and $3,426, respectively, available to reduce future tax liabilities which expire at various dates through 2038. As of December 31, 2019, 2018 and 2017 the Company had state research and development tax credit carryforwards of approximately $1,112, $885, and $589, respectively, available to reduce future tax liabilities which expire at various dates through 2033. During 2018 the Company finalized its review of the impact of TCJA on the NOL rules and determined its impact on its NOL carryovers. The impact of TCJA to the Company was primarily attributable to the limitation on the deductions associated with executive compensation under Internal Revenue Code Section 162(m). The Company made adjustments during 2018 to its carryovers associated with its analysis of TCJA so that as of December 31, 2018, the Company’s NOL carryovers have been adjusted to comply with the impact of TCJA’s changes to the tax treatment of executive compensation under Internal Revenue Code Section 162(m). Since a full valuation allowance has been provided against the Company’s net deferred tax asset, the impact of adjustments during 2018 to the net deferred tax asset associated with the impact of TCJA does not result in any financial statement impact. Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. During 2019, the Company completed a study to assess the impact of ownership changes, if any, on the Company’s ability to use its NOL and tax credit carryovers as defined under Section 382 of the Internal Revenue Code (“IRC 382”). As a result of the study, the Company concluded that there were ownership changes that occurred during the years 2006, 2012 and 2015 that could be subject to IRC 382 limitations. Of the total federal NOL carryovers of $292,342 at December 31, 2019, approximately $28,990 are estimated to expire unbenefited due to IRC 382 annual limitations, and approximately $112 of state NOL carryovers are estimated to expire unbenefited due to IRC 382 annual limitations. In addition, of our total federal R&D credit carryover of $4,044 at December 31, 2019, approximately $1,212 are estimated to expire unbenefited due to IRC 382 annual limitations. These IRC 382 annual limitations may limit the Company’s ability to use these pre-ownership change federal and state NOL carryovers and pre-ownership change federal tax credit carryovers, which may potentially increase the Company’s future federal and state income tax liability. The Company files income tax returns in the United States and in several states. The federal and state income tax returns are generally subject to tax examinations for the tax years ended December 31, 2016 through December 31, 2019. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period. The Company originally recorded an unrecognized tax benefit of $902 (net rate effected unrecognized tax benefit of $235) during 2017 associated with its IRS examination of its 2015 federal income tax return, and accordingly reduced its NOL deferred tax asset during 2017. The Company settled its IRS audit during 2018, which resulted in a total decrease to its NOL carryover of $36. As a result of the IRS settlement, the Company reversed this unrecognized tax benefit and trued-up its NOL carryover during 2018 to reflect the reduction of the $36 to its NOL as required by the IRS settlement. This is included in the tabular rollforward below of gross unrecognized tax benefits. Since a full valuation allowance has been provided against the Company’s net operating loss carryover, the true up of the NOL carryover and associated deferred tax asset during 2018 does not result in any financial statement impact. For all years through December 31, 2019, the Company generated research credits but has not conducted a study to document the qualified activities. This study may result in an adjustment to the Company’s research and development credit carryforwards. The Company has reduced its deferred tax asset for its estimate of credits that could be reduced, and that is included in the tabular rollforward of uncertain tax positions. Since a full valuation allowance has been provided against the Company’s research and development credits the reduction in the gross deferred tax asset established for the research and development credit carryforwards does not result in any financial statement impact. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) is as follows: As of December 31, 2019 2018 2017 Gross UTB Balance at January 1 $ 502 $ 1,364 $ — Additions based on tax positions related to the current year 76 64 57 Additions for tax positions of prior years — — 1,307 Reductions for tax positions of prior years — (24) — Settlements — (902) — Reductions due to lapse of applicable statute of limitations — — — Gross UTB Balance at December 31 $ 578 $ 502 $ 1,364 Net UTB impacting the effective tax rate at December 31 (included in the change in the valuation allowance in rate reconciliation) $ 549 $ 481 $ 680 |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2019 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | 17. EMPLOYEE BENEFITS The Company has a retirement savings plan, which is qualified under section 401(k) of the Code, for its employees. The plan allows eligible employees to defer, at the employee’s discretion, pretax compensation up to the Internal Revenue Service annual limits. Employees become eligible to participate starting on the first day of employment. The Company is not required to contribute to this plan. Total expense for contributions made by the Company for the years ended December 31, 2019, 2018 and 2017 was $1,170, $1,208 and $969 respectively. |
UNAUDITED QUARTERLY OPERATING R
UNAUDITED QUARTERLY OPERATING RESULTS | 12 Months Ended |
Dec. 31, 2019 | |
UNAUDITED QUARTERLY OPERATING RESULTS | |
UNAUDITED QUARTERLY OPERATING RESULTS | 18. UNAUDITED QUARTERLY OPERATING RESULTS The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2019 and 2018: First Second Third Fourth Year ended December 31, 2019 Quarter Quarter Quarter Quarter Product revenues, net $ 74,516 $ 75,040 $ 72,942 $ 74,203 Costs and expenses Cost of product revenues 49,164 48,654 46,754 49,088 Research and development 2,992 2,459 2,491 2,398 Selling, general and administrative 32,352 28,935 30,072 25,090 Total costs and expenses 84,508 80,048 79,317 76,576 Loss from operations $ (9,992) $ (5,008) $ (6,375) $ (2,373) Interest expense (234) (236) (228) (211) Interest income 526 532 494 383 Net income (loss) $ (9,700) $ (4,712) $ (6,109) $ (2,201) Weighted-average shares - basic and diluted 33,331,917 33,397,709 33,481,923 33,600,566 Loss per share - basic and diluted $ (0.29) $ (0.14) $ (0.18) $ (0.07) First Second Third Fourth Year ended December 31, 2018 Quarter Quarter Quarter Quarter (1) Product revenues, net $ 63,749 $ 73,061 $ 70,176 $ 73,427 Costs and expenses Cost of product revenues 43,106 46,838 46,007 29,726 Research and development 2,268 2,237 1,907 2,249 Selling, general and administrative 31,582 31,279 33,448 30,451 Total costs and expenses 76,956 80,354 81,362 62,426 Loss from operations $ (13,207) $ (7,293) $ (11,186) $ 11,001 Interest expense (5,700) (6,158) (5,868) (2,404) Interest income 255 391 552 489 Net income (loss) $ (18,652) $ (13,060) $ (16,502) $ 9,086 Weighted-average shares - basic 32,903,674 32,967,718 33,012,174 33,250,180 (Loss) earnings per share - basic $ (0.57) $ (0.40) $ (0.50) $ 0.27 Weighted-average shares - diluted 32,903,674 32,967,718 33,012,174 33,769,765 (Loss) earnings per share - diluted $ (0.57) $ (0.40) $ (0.50) $ 0.27 (1) In the fourth quarter of 2018, the Company executed the Third Amendment to the Nucynta Commercialization Agreement, which eliminated the guaranteed minimum royalty payment obligations after 2018. As a result, the Company remeasured the remaining contractual obligation as of the Amendment Date and reduced the intangible asset. Consequently, amortization expense included within cost of product revenues was $15,494 in the fourth quarter compared to $32,407 , $32,407 and $29,526 in the third, second and first quarters, respectively. Similarly, interest expense associated with the minimum royalty payments was $2,169 in the fourth quarter compared to $5,641 , $5,943 and $5,528 in the third, second and first quarters, respectively. See Note 9 for further detail. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS Nucynta Purchase Agreement On February 6, 2020, the Company entered into an asset purchase agreement (“Nucynta Purchase Agreement”) with Assertio, pursuant to which the Company agreed to acquire from Assertio certain assets related to the Nucynta Products for an aggregate purchase price of $375,000 (the “Purchase Price”), subject to certain closing and post-closing adjustments as described in the Nucynta Purchase Agreement. In connection with the Nucynta Purchase Agreement, the Company also agreed to assume certain regulatory and supply chain contracts, liabilities and obligations related to Nucynta Products. The Nucynta Purchase Agreement contains customary representations, warranties and covenants, and indemnification provisions subject to specified limitations. From and after the closing of the Nucynta Purchase Agreement, the Company will pay royalties directly to Grünenthal GmbH at a rate of 14% of net sales of the Nucynta Products. This royalty payment obligation will replace the Company’s previous obligation to pay a royalty rate of 14% of net sales of the Nucynta Products to Grünenthal, subject to a guaranteed royalty of $34,000 when net sales are between $180,000 and $243,000. On February 13, 2020, the Company closed the Nucynta Acquisition in accordance with the Nucynta Purchase Agreement. Upon the closing of the transactions contemplated by the Nucynta Purchase Agreement, the Nucynta Commercialization Agreement is terminated with the exception of certain provisions thereof which will survive pursuant to the terms of the Nucynta Purchase Agreement, and the Company’s royalty payment obligations to Assertio thereunder will cease. 2020 Term Loan On February 6, 2020, in connection with the execution of the Nucynta Purchase Agreement, the Company entered into a Loan Agreement with BioPharma Credit PLC, as collateral agent and lender; and BioPharma Credit Investments V (Master) LP, as lender (the “2020 Loan Agreement”). The 2020 Loan Agreement provides for a $200,000 secured term loan (the “2020 Term Loan”), the proceeds of which were used to finance a portion of the purchase price paid pursuant to the Nucynta Purchase Agreement. The 2020 Term Loan will mature on the 48-month anniversary of the closing of the Nucynta Acquisition, and is guaranteed by the Company’s material domestic subsidiaries and is also secured by substantially all of the Company’s material domestic assets. The 2020 Term Loan will bear interest at a rate based upon LIBOR (subject to a LIBOR floor of 2.0% ), plus a margin of 7.5% per annum. The Company is required to repay the 2020 Term Loan by making equal quarterly payments. The 2020 Loan Agreement contains certain covenants and obligations of the parties, including, without limitation, covenants that require the Company to maintain $200,000 in annual net sales and covenants that limit the Company’s ability to incur additional indebtedness or liens, make acquisitions or other investments or dispose of assets outside the ordinary course of business. Failure to comply with these covenants would constitute an event of default under the 2020 Loan Agreement, notwithstanding the Company’s ability to meet its debt service obligations. The 2020 Loan Agreement also includes various customary remedies for the lenders following an event of default, including the acceleration of repayment of outstanding amounts under the 2020 Loan Agreement and execution upon the collateral securing obligations under the 2020 Loan Agreement. 2026 Convertible Notes On February 13, 2020, the Company issued 2.625% convertible senior notes due 2026 (the “convertible notes”), in the aggregate principal amount of $143,750, in a public offering registered under the Securities Act of 1933, as amended. The convertible notes are senior, unsecured obligations and will accrue interest at a rate of 2.625% per annum, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020. The notes will mature on February 15, 2026, unless earlier repurchased, redeemed or converted. Before August 15, 2025, noteholders will have the right to convert their notes only upon the occurrence of certain events. From and after August 15, 2025, noteholders may convert their notes at any time at their election until the close of business on the scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The initial conversion rate is 34.2618 SVB Term Loan On January 23, 2020, the Company paid off the outstanding principal and accrued interest on our term loan with SVB with cash on hand. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Accounting | Basis of Accounting The consolidated financial statements include the accounts of Collegium Pharmaceutical, Inc. as well as the accounts of its subsidiaries Collegium Securities Corp. (a Massachusetts corporation), incorporated in December 2015, and Collegium NF LLC (a Delaware limited liability company), incorporated in December 2017, both wholly owned subsidiaries requiring consolidation. The consolidated financial statements are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, costs and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. Estimates in the Company’s consolidated financial statements include revenue recognition, including the estimates of product returns, units prescribed, discounts and allowances related to commercial sales of products, estimates of useful lives with respect to intangible assets, accounting for stock based compensation, contingencies, impairment of intangible assets and tax valuation reserves. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates under different assumptions or conditions. |
Fair Value Measurements | Fair Value Measurements Disclosures of fair value information about financial instruments are required, whether or not recognized in the balance sheet, for financial instruments with respect to which it is practicable to estimate that value. Fair value measurements and disclosures describe the fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows: Level 1 inputs: Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 inputs: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3 inputs: Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability Transfers are calculated on values as of the transfer date. There were no transfers between Levels 1 2 and 3 The following tables present the Company’s financial instruments carried at fair value using the lowest level input applicable to each financial instrument at December 31, 2019 and 2018. Significant Quoted Prices other Significant in active observable unobservable markets inputs inputs December 31, 2019 Total (Level 1) (Level 2) (Level 3) Money market funds, included in cash equivalents $ 94,841 $ 94,841 $ — $ — December 31, 2018 Money market funds, included in cash equivalents $ 92,914 $ 92,914 $ — $ — As of December 31, 2019, and December 31, 2018, the carrying amounts of the cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, accrued rebates, returns and discount, operating lease liabilities, and term loan payable approximated their estimated fair values. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash deposits primarily with one reputable and nationally recognized financial institution. In addition, as of December 31, 2019, the Company’s cash equivalents were invested in money market funds. The Company has not experienced any material losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the financial institutions in which those deposits are held. Three customers comprised 10% or more of the Company’s accounts receivable balance as of December 31, 2019. These customers comprised 51%, 27% and 19% of the accounts receivable balance, respectively. The same three customers comprised 10% or more of the Company’s revenue during the year ended December 31, 2019. These customers comprised 34%, 31% and 30% of revenue, respectively. To date, the Company has not experienced any losses with respect to the collection of its accounts receivable and believes that its entire accounts receivable balance is collectible as of December 31, 2019. The Company has no financial |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash in readily available checking and savings accounts and money market funds. The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company’s cash equivalents, which consist of money market funds, are measured at fair value on a recurring basis. As of December 31, 2019 and 2018, the carrying amount of cash equivalents was $94,841 and $92,914, respectively, which approximates fair value and was determined based upon Level 1 inputs. Money market funds are valued using quoted market prices with no valuation adjustments applied. Accordingly, these securities are categorized as Level 1. |
Restricted Cash | Restricted Cash Restricted cash is reported as non-current unless the restrictions are expected to be released in the next twelve months. The Company had no restricted cash as of December 31, 2019 and 2018. As of December 31, 2017, the Company had restricted cash of $97, which represents cash held in a depository account at a financial institution to collateralize a conditional stand by letter of credit for the Company’s former headquarters. |
Inventory | Inventory Inventories are stated at the lower of cost or net realizable value. Inventory costs consist of costs related to the manufacturing of the Company’s products, which are primarily the costs of contract manufacturing. The Company determines the cost of its inventories on a specific identification basis, and removes amounts from inventories on a first-in, first-out basis. If the Company identifies excess, obsolete or unsalable items, inventories are written down to their realizable value in the period in which the impairment is identified. These adjustments are recorded based upon various factors, including the level of product manufactured by the Company, the level of product in the distribution channel, current and projected demand and the expected shelf-life of the inventory components. As of December 31, 2019, cumulative estimates of excess inventory recorded as a component of cost of product revenues were immaterial. The Company outsources the manufacturing of Xtampza ER to a sole contract manufacturer that produces the finished product. In addition, the Company currently relies on a sole supplier for the active pharmaceutical ingredient in Xtampza ER. The Company’s Nucynta Commercialization Agreement partner also relies on a sole supplier to produce the finished products. Accordingly, the Company has concentration risk associated with its commercial manufacturing of Xtampza ER and the Nucynta Products. The Company has capitalized $9,643 of inventory as of December 31, 2019. The Company expects sales of the capitalized units to occur during the next twelve months. |
Property and Equipment | Property and Equipment Property and equipment, including leasehold improvements, are recorded at cost. Maintenance and repair costs are expensed as incurred. Costs which materially improve or extend the lives of existing assets are capitalized. Property and equipment are depreciated when placed into service using the straight-line method based on their estimated useful lives as follows: Asset Category Estimated Useful Life Computers and office equipment 3-5 years Laboratory equipment 5 years Furniture and fixtures 7 years Manufacturing equipment 5-10 years Leasehold improvements Lesser of remaining lease term and estimated useful life Costs for capital assets not yet placed into service have been capitalized as construction-in-progress, and will be depreciated in accordance with the above guidelines once placed into service. Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in the statements of operations. |
Intangible Assets | Intangible Assets The Company records the fair value of finite-lived intangible assets as of the transaction date. Intangible assets are then amortized over their estimated useful lives using either the straight-line method, or if reliably determinable, based on the pattern in which the economic benefit of the asset is expected to be utilized. The Company tests intangible assets for potential impairment whenever triggering events or circumstances present an indication of impairment. If the sum of expected undiscounted future cash flows of the intangible assets is less than the carrying amount of such assets, the intangible assets would be written down to the estimated fair value, calculated based on the present value of expected future cash flows. |
Revenue Recognition | Revenue Recognition The Company’s revenue to date is from sales of the Company’s products, which are primarily sold to distributors, which in turn sell the product to pharmacies for the treatment of patients. In accordance with ASC Topic 606, Revenue from Contracts with Customers |
Research and Development Costs | Research and Development Costs Research and development costs are charged to expense as incurred and consist of costs incurred to further the Company’s research and development activities, including salaries and employee related costs, costs associated with conducting preclinical and clinical activities, including fees paid to third-party professional consultants and service providers, costs incurred under preclinical and clinical trial agreements, costs for laboratory supplies, costs to acquire, develop and manufacture preclinical study and clinical trial materials, facilities, depreciation and other expenses including allocated expenses for rent and maintenance of facilities. |
Patent Costs | Patent Costs Costs related to filing and pursuing patent applications are recorded as selling, general and administrative expense as incurred since the recoverability of such expenditures is uncertain. |
Advertising and Product Promotion Costs | Advertising and Product Promotion Costs Advertising and product promotion costs are included in selling, general and administrative expenses and were $9,527, $17,497, $11,019 in the years ended December 31, 2019, 2018, and 2017 respectively. Advertising and product promotion costs are expensed as incurred. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for grants of stock options, restricted stock units and performance share units to employees, as well as to the Board of Directors, based on their grant date fair value and recognizes compensation expense over their vesting period, net of actual forfeitures. The Company estimates the fair value of stock options as of the date of grant using the Black-Scholes option pricing model. The Company estimates restricted stock units and performance share units based on the fair value of the underlying common stock as determined by management. For performance share units, the Company estimates the number of shares that will vest based upon the probability of achieving performance metrics. |
Income Taxes | Income Taxes The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and the absence of carryback available from results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future, in excess of its net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions on the basis of a two-step process whereby (i) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more likely than not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company will recognize interest and penalties related to uncertain tax positions within income tax expense. Any accrued interest and penalties will be included within the related tax liability. As of December 31, 2019 and December 31, 2018, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements of operations. |
Net Loss per Common Share | Net Loss per Common Share Basic net loss per common share is calculated by dividing the net loss attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period, as determined in accordance with the treasury stock accounting method. For purposes of the diluted net loss per share calculation, stock options, warrants and unvested restricted stock units are considered potentially dilutive securities. Because the Company has reported a net loss for the years ended December 31, 2019, 2018 and 2017, diluted net loss per common share is the same as basic net loss per common share for those periods. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements New accounting pronouncements are issued periodically by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as of the specified effective dates. Adoption of ASC Topic 606, Revenue from Contracts with Customers The Company adopted ASC Topic 606 on January 1, 2018 using the modified retrospective method. Under this method, prior periods were not retrospectively adjusted and, as a result, the reported results for 2018 reflect the application of ASC Topic 606 guidance while the reported results for 2017 were prepared under the guidance of ASC Topic 605, Revenue Recognition Immediately prior to the adoption date of January 1, 2018, the Company recognized revenue in accordance with legacy GAAP, or when there was persuasive evidence of an arrangement; when title and risk of loss had passed to the customer; when estimated provisions for chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns were reasonably determinable; and when collectability was reasonably assured. The satisfaction of these criteria generally occurred upon delivery of products to customers, or the sell-in method of revenue recognition under legacy GAAP. The Company began recognizing revenue on the sell-in method in the third quarter of 2017. As a result of the considerations discussed above, the Company concluded that, as of the adoption date, it would record revenue net of a provision for estimated chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns upon delivery of products to customers under either the sell-in method of revenue recognition under legacy GAAP or under ASC Topic 606 as of the adoption date. Therefore, the adoption of ASC Topic 606 did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of January 1, 2018. Prior to the third quarter of 2017, the Company recognized revenue when products were dispensed to end users, or the sell-through method of revenue recognition under legacy GAAP, as the Company did not have sufficient experience with product sales to estimate returns at the time product was sold to customers. In the third quarter of 2017, the Company transitioned to the sell-in method of revenue recognition and the Company recorded a cumulative one-time $4,377 increase to revenues during the three months ended September 30, 2017. Therefore, the adoption of Topic 606 would not have had a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows as of December 31, 2018. For additional information related to revenue from contracts with customers and accounting policies, please see Note 3. Adoption of ASC Topic 842, Leases The Company adopted Accounting Standard Updated (“ASU”) 2016-02, Leases Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (ASC Topic 326): Measurement of Credit Losses on Financial Instruments reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new standard is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2016-13 on January 1, 2020 and the adoption did not have a material impact on the Company’s consolidated financial position, results of operations, equity or cash flows. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes The amendments in ASU 2019-12 affect a wide variety of income tax accounting standards with the objective of reducing their complexity. The Company is currently evaluating the standard’s effect on the Company’s consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of financial instruments measured at fair value by level within fair value hierarchy | Significant Quoted Prices other Significant in active observable unobservable markets inputs inputs December 31, 2019 Total (Level 1) (Level 2) (Level 3) Money market funds, included in cash equivalents $ 94,841 $ 94,841 $ — $ — December 31, 2018 Money market funds, included in cash equivalents $ 92,914 $ 92,914 $ — $ — |
Schedule of estimated useful lives of property and equipment | Asset Category Estimated Useful Life Computers and office equipment 3-5 years Laboratory equipment 5 years Furniture and fixtures 7 years Manufacturing equipment 5-10 years Leasehold improvements Lesser of remaining lease term and estimated useful life |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | |
Summary of product revenue provision and allowance | Trade Rebates and Product Allowances and Incentives (1) Returns (2) Chargebacks (3) Balance at December 31, 2017 $ 12,647 $ 3,137 $ 2,256 Provision related to current period sales 243,158 17,326 68,189 Liabilities assumed from asset acquisition (4) 22,406 — 254 Changes in estimate related to prior period sales (32) — — Credits/payments made (148,861) (4,998) (55,858) Balance at December 31, 2018 $ 129,318 $ 15,465 $ 14,841 Provision related to current period sales 263,315 14,991 65,155 Changes in estimate related to prior period sales (2,865) — — Credits/payments made (259,867) (2,808) (65,976) Balance at December 31, 2019 $ 129,901 $ 27,648 $ 14,020 (1) Provisions for rebates and incentives includes managed care rebates, government rebates and co-pay program incentives. Provisions for rebates and incentives are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s Consolidated Balance Sheets. (2) Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued rebates, returns and discounts in the Company’s Consolidated Balance Sheets. (3) Provisions for trade allowances and chargebacks include fees for distribution service fees, prompt pay discounts, and chargebacks. Trade allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s Consolidated Balance Sheets. (4) The Company recorded a liability of $22,660 related to sales of Nucynta Products that occurred prior to the closing date of January 9, 2018, for which the Company is liable under the terms of the Nucynta Commercialization Agreement. This assumed liability, representing $22,406 of assumed rebates and incentives and $254 of assumed trade allowances and chargebacks, was recorded as a component of the intangible asset acquired in the Company’s Consolidated Balance Sheets. |
Schedule of disaggregation of revenue | Year ended December 31, 2019 2018 2017 Xtampza ER $ 105,012 $ 69,383 $ 28,476 Nucynta Products 191,689 211,030 — Total product revenues, net $ 296,701 $ 280,413 $ 28,476 |
NET LOSS PER COMMON SHARE (Tabl
NET LOSS PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NET LOSS PER COMMON SHARE | |
Schedule of computations of basic and diluted net loss per share | Years ended December 31, 2019 2018 2017 Net loss $ (22,722) $ (39,128) $ (74,865) Weighted-average number of common shares used in net loss per share - basic and diluted 33,453,844 32,953,808 30,265,262 Loss per share - basic and diluted $ (0.68) $ (1.19) $ (2.47) |
Schedule of potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding | Years ended December 31, 2019 2018 2017 Stock options 3,955,887 3,585,856 3,037,690 Warrants 1,041,667 1,041,667 2,445 Unvested restricted stock (1) — 3,018 31,943 Restricted stock units 849,679 514,603 218,872 Performance share units 99,400 — — (1) - Includes shares of unvested restricted stock remaining from the early exercise of stock options. |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INVENTORY | |
Schedule of Inventory | As of December 31, As of December 31, 2019 2018 Raw materials $ 795 $ 496 Work in process 1,427 671 Finished goods 7,421 6,650 Total inventory $ 9,643 $ 7,817 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
Schedule of components of prepaid expenses and other current assets | As of December 31, 2019 2018 Prepaid regulatory fees $ 1,222 $ 3,035 Prepaid development costs 474 78 Prepaid insurance 414 340 Other prepaid expenses 854 655 Other current assets 141 1,008 Prepaid expenses and other current assets $ 3,105 $ 5,116 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | |
Schedule of components of property and equipment | As of December 31, 2019 2018 Computers and office equipment $ 1,453 $ 1,277 Laboratory equipment 1,220 1,613 Furniture and fixtures 1,066 1,111 Manufacturing equipment 987 — Leasehold improvements 541 567 Construction-in-process 8,875 6,543 Total property and equipment 14,142 11,111 Less: accumulated deprecation (2,288) (1,837) Property and equipment, net $ 11,854 $ 9,274 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INTANGIBLE ASSETS | |
Carrying amount of Nucynta intangible | As of December 31, As of December 31, 2019 2018 Gross carrying amount $ 154,089 $ 154,089 Accumulated amortization (124,586) (109,834) Intangible assets, net $ 29,503 $ 44,255 Gross Carrying Value Accumulated Amortization Net Book Value Intangible Asset, net Cost basis as of acquisition date $ 515,627 $ — $ 515,627 Amortization expense from acquisition date through Amendment Date — (107,662) (107,662) Adjustment due to the remeasurement of liability as of Amendment Date (369,581) — (369,581) Additional costs incurred as of Amendment Date (1) 8,043 — 8,043 Amortization expense from Amendment Date through fiscal year end — (2,172) (2,172) Balance as of December 31, 2018: $ 154,089 $ (109,834) $ 44,255 (1) Represents fair value of warrant issued in connection with the Amendment to the Nucynta Commercialization Agreement. |
Costs accumulated to acquire assets and consideration allocated to assets | The table below represents the costs accumulated during the year ended December 31, 2018 to acquire the sublicense of the Nucynta Products based on the terms of the Nucynta Commercialization Agreement, as amended: Acquisition consideration: Upfront cash paid $ 18,877 Minimum royalty payment obligation (1) 112,719 Rebates, incentives, trade allowances and chargebacks assumed 22,660 Warrant issued 8,043 Total acquisition consideration: $ 162,299 (1) Represents $132,000 of minimum royalty payments owed under the Nucynta Commercialization Agreement discounted for present value adjustments of $19,281 . The Company then allocated the consideration transferred to the individual assets acquired on a relative fair value basis as summarized in the table below: Assets acquired: Nucynta Intangible Asset $ 154,089 Inventory 6,223 Prepaid expenses 1,987 Total consideration allocated to assets acquired: $ 162,299 |
Summary of costs included in acquired asset | Costs included in Nucynta Intangible Asset: Upfront cash paid $ 10,000 Transaction costs 667 Minimum royalty payment obligation (1) 482,300 Rebates, incentives, trade allowances and chargebacks assumed (2) 22,660 Total cost: $ 515,627 (1) Represents $537,000 of minimum royalty payments owed under the Nucynta Commercialization Agreement discounted for present value adjustments of $54,700 . (2) Represents $22,660 of liabilities assumed related to sales of Nucynta Products that occurred prior to the closing date of January 9, 2018, for which the Company is liable under the terms of the Nucynta Commercialization Agreement. This assumed liability, representing $22,406 of assumed rebates and incentives and $254 of assumed trade allowances and chargebacks, was recorded as a component of the intangible asset acquired as part of the Nucynta Commercialization Agreement. |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCRUED EXPENSES | |
Schedule of components of accrued expenses | As of December 31, As of December 31, 2019 2018 Accrued royalties $ 21,893 $ 15,138 Accrued bonuses 4,047 4,286 Accrued incentive compensation 1,650 1,806 Accrued payroll and related benefits 1,154 1,544 Accrued sales and marketing 775 2,193 Accrued interest 473 274 Accrued audit and legal 308 480 Accrued inventory — 3,745 Accrued other operating costs 3,180 1,085 Total accrued expenses $ 33,480 $ 30,551 |
TERM LOAN PAYABLE (Tables)
TERM LOAN PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
TERM LOAN PAYABLE | |
Schedule of future payments under debt agreements | 2020 $ 3,833 2021 3,833 2022 3,834 Balance $ 11,500 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
Schedule of lease cost | Year ended December 31, 2019 Lease Cost Operating lease cost $ 1,446 Short-term lease cost 752 Variable lease cost 283 Total lease cost $ 2,481 |
Schedule of lease term and discount rate | As of December 31, Lease Term and Discount Rate: 2019 Weighted-average remaining lease term — operating leases (years) 9.6 Weighted-average discount rate — operating leases 6.1% |
Schedule of other information | Year ended December 31, Other Information: 2019 Cash paid for amounts included in the measurement of operating leases liabilities $ 1,133 Leased assets obtained in exchange for new operating lease liabilities — |
Schedule of future minimum lease payments - ASC Topic 842 | 2020 $ 1,252 2021 1,290 2022 1,328 2023 1,366 2024 1,404 After 2024 6,858 Total minimum lease payments $ 13,498 Less: Present value discount 3,404 Present value of lease liabilities $ 10,094 |
Schedule of future minimum lease payments - legacy GAAP | 2019 $ 1,032 2020 1,305 2021 1,261 2022 1,299 2023 1,337 After 2023 8,423 Total minimum lease payments $ 14,657 |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
EQUITY | |
Schedule of shares of common stock reserved for future issuance | As of December 31, 2019 2018 Options to purchase common stock 5,105,980 4,710,771 Employee stock purchase plan 1,046,568 788,053 Warrants 1,041,667 1,041,667 Total 7,194,215 6,540,491 |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
STOCK BASED COMPENSATION | |
Summary of performance share units activity | Weighted-Average Shares Grant Date Fair Value Outstanding at December 31, 2018 — $ — Granted 99,400 15.90 Outstanding at December 31, 2019 99,400 $ 15.90 |
Summary of restricted stock units activity | Weighted-Average Shares Grant Date Fair Value Outstanding at December 31, 2018 514,603 $ 20.67 Granted 634,708 15.48 Vested (196,139) 20.73 Forfeited (103,493) 18.04 Outstanding at December 31, 2019 849,679 $ 17.10 |
Summary of stock option activity | Weighted- Weighted- Average Average Remaining Aggregate Exercise Price Contractual Intrinsic Shares per Share Term (in years) Value Outstanding at December 31, 2018 3,585,856 $ 16.20 8.0 $ 11,170 Granted 1,095,908 15.22 Exercised (201,308) 10.16 Cancelled (524,569) 18.00 Outstanding at December 31, 2019 3,955,887 $ 16.00 7.5 $ 21,257 Exercisable at December 31, 2019 2,094,720 $ 15.05 6.6 $ 13,020 |
Summary of stock-based compensation | Year Ended December 31, 2019 2018 2017 Research and development expenses $ 2,126 $ 1,468 $ 888 Selling, general and administrative expenses 14,402 12,310 7,057 Total stock-based compensation expense $ 16,528 $ 13,778 $ 7,945 |
Schedule of fair value assumption using Black-Scholes option-pricing model | Year ended December 31, 2019 2018 2017 Risk-free interest rate 2.4 % 2.6 % 2.0 % Volatility 63.3 % 64.8 % 71.0 % Expected term (years) 6.1 6.1 6.0 Expected dividend yield — % — % — % |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Schedule of reconciliation of income tax expense (benefit) at statutory federal income tax rate to income taxes | As of December 31, 2019 2018 2017 Federal income tax expense at statutory rate 21.00 % 21.00 % 34.00 % (Increase) decrease income tax (benefit) resulting from: State income tax, net of federal benefit 5.59 5.89 3.93 Permanent differences (3.24) (2.51) (2.49) U.S. - TCJA — — (43.32) Research and development credit 1.83 0.52 0.53 Change in valuation allowance (25.18) (24.90) 7.35 Effective income tax rate 0.00 % 0.00 % 0.00 % |
Schedule of significant components of deferred tax assets and liabilities | As of December 31, 2019 2018 Deferred tax assets: U.S. and state net operating loss carryforwards $ 66,553 $ 82,501 Research and development credits 3,768 4,364 Operating lease liabilities 2,630 — Operating lease assets (2,357) — Accruals and other (1) 14,286 4,676 Depreciation and amortization 92 269 Total deferred tax assets 84,972 91,810 Valuation allowance (77,285) (80,290) Deferred tax assets after valuation allowance 7,687 11,520 Deferred tax liabilities – intangible assets (7,687) (11,520) Net deferred tax assets $ — $ — (1) Balance includes $5,796 and $3,137 of accruals related to stock-based compensation expense as of December 31, 2019 and 2018, respectively. Balance also includes $7,204 and $0 of accrued rebates, returns, and discounts as of December 31, 2019 and 2018, respectively. |
Schedule of reconciliation of gross unrecognized tax benefits | As of December 31, 2019 2018 2017 Gross UTB Balance at January 1 $ 502 $ 1,364 $ — Additions based on tax positions related to the current year 76 64 57 Additions for tax positions of prior years — — 1,307 Reductions for tax positions of prior years — (24) — Settlements — (902) — Reductions due to lapse of applicable statute of limitations — — — Gross UTB Balance at December 31 $ 578 $ 502 $ 1,364 Net UTB impacting the effective tax rate at December 31 (included in the change in the valuation allowance in rate reconciliation) $ 549 $ 481 $ 680 |
UNAUDITED QUARTERLY OPERATING_2
UNAUDITED QUARTERLY OPERATING RESULTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
UNAUDITED QUARTERLY OPERATING RESULTS | |
Summary of unaudited quarterly results of operations | First Second Third Fourth Year ended December 31, 2019 Quarter Quarter Quarter Quarter Product revenues, net $ 74,516 $ 75,040 $ 72,942 $ 74,203 Costs and expenses Cost of product revenues 49,164 48,654 46,754 49,088 Research and development 2,992 2,459 2,491 2,398 Selling, general and administrative 32,352 28,935 30,072 25,090 Total costs and expenses 84,508 80,048 79,317 76,576 Loss from operations $ (9,992) $ (5,008) $ (6,375) $ (2,373) Interest expense (234) (236) (228) (211) Interest income 526 532 494 383 Net income (loss) $ (9,700) $ (4,712) $ (6,109) $ (2,201) Weighted-average shares - basic and diluted 33,331,917 33,397,709 33,481,923 33,600,566 Loss per share - basic and diluted $ (0.29) $ (0.14) $ (0.18) $ (0.07) First Second Third Fourth Year ended December 31, 2018 Quarter Quarter Quarter Quarter (1) Product revenues, net $ 63,749 $ 73,061 $ 70,176 $ 73,427 Costs and expenses Cost of product revenues 43,106 46,838 46,007 29,726 Research and development 2,268 2,237 1,907 2,249 Selling, general and administrative 31,582 31,279 33,448 30,451 Total costs and expenses 76,956 80,354 81,362 62,426 Loss from operations $ (13,207) $ (7,293) $ (11,186) $ 11,001 Interest expense (5,700) (6,158) (5,868) (2,404) Interest income 255 391 552 489 Net income (loss) $ (18,652) $ (13,060) $ (16,502) $ 9,086 Weighted-average shares - basic 32,903,674 32,967,718 33,012,174 33,250,180 (Loss) earnings per share - basic $ (0.57) $ (0.40) $ (0.50) $ 0.27 Weighted-average shares - diluted 32,903,674 32,967,718 33,012,174 33,769,765 (Loss) earnings per share - diluted $ (0.57) $ (0.40) $ (0.50) $ 0.27 (1) In the fourth quarter of 2018, the Company executed the Third Amendment to the Nucynta Commercialization Agreement, which eliminated the guaranteed minimum royalty payment obligations after 2018. As a result, the Company remeasured the remaining contractual obligation as of the Amendment Date and reduced the intangible asset. Consequently, amortization expense included within cost of product revenues was $15,494 in the fourth quarter compared to $32,407 , $32,407 and $29,526 in the third, second and first quarters, respectively. Similarly, interest expense associated with the minimum royalty payments was $2,169 in the fourth quarter compared to $5,641 , $5,943 and $5,528 in the third, second and first quarters, respectively. See Note 9 for further detail. |
NATURE OF BUSINESS (Details)
NATURE OF BUSINESS (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
NATURE OF BUSINESS | ||
Accumulated deficit | $ 359,899 | $ 337,177 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2019USD ($)customer | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Financial instruments with off balance sheet risk of loss, assets | $ 0 | ||
Financial instruments with off balance sheet risk of loss, liabilities | 0 | ||
Carrying amount of cash equivalents | 94,841,000 | $ 92,914,000 | |
Restricted cash | 0 | 0 | $ 97,000 |
Inventory | 9,643,000 | 7,817,000 | |
Accrued interest or penalties related to uncertain tax positions | 0 | 0 | |
Accrued interest or penalties recognized related to uncertain tax positions | 0 | 0 | |
Selling, general and administrative expenses | |||
Advertising and product promotion costs | $ 9,527,000 | $ 17,497,000 | $ 11,019,000 |
Accounts Receivable | Customer Concentration Risk | |||
Number of customers | 3 | ||
Accounts Receivable | Customer Concentration Risk | Customer One | |||
Concentration Risk, Percentage | 51.00% | ||
Accounts Receivable | Customer Concentration Risk | Customer Two | |||
Concentration Risk, Percentage | 27.00% | ||
Accounts Receivable | Customer Concentration Risk | Customer Three | |||
Concentration Risk, Percentage | 19.00% | ||
Revenue | Customer Concentration Risk | |||
Number of customers | customer | 3 | ||
Revenue | Customer Concentration Risk | Customer One | |||
Concentration Risk, Percentage | 34.00% | ||
Revenue | Customer Concentration Risk | Customer Two | |||
Concentration Risk, Percentage | 31.00% | ||
Revenue | Customer Concentration Risk | Customer Three | |||
Concentration Risk, Percentage | 30.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value Measurements (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Transfer of Assets From Level 1 to Level 2 | $ 0 | $ 0 |
Transfer of Assets From Level 2 to Level 1 | 0 | 0 |
Transfer of Liabilities From Level 1 to Level 2 | 0 | 0 |
Transfer of Liabilities From Level 2 to Level 1 | 0 | 0 |
Transfer of Assets Into Level 3 | 0 | 0 |
Transfer of Assets Out of Level 3 | 0 | 0 |
Transfer of Liabilities Into Level 3 | 0 | 0 |
Transfer of Liabilities Out of Level 3 | 0 | 0 |
Money market funds | Recurring | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Cash equivalents | 94,841 | 92,914 |
Money market funds | Quoted Prices in active markets (Level 1) | Recurring | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Cash equivalents | $ 94,841 | $ 92,914 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Computers and office equipment | Minimum | |
Property and Equipment | |
Estimated Useful Life | 3 years |
Computers and office equipment | Maximum | |
Property and Equipment | |
Estimated Useful Life | 5 years |
Laboratory equipment | |
Property and Equipment | |
Estimated Useful Life | 5 years |
Furniture and fixtures | |
Property and Equipment | |
Estimated Useful Life | 7 years |
Manufacturing Equipment | Minimum | |
Property and Equipment | |
Estimated Useful Life | 5 years |
Manufacturing Equipment | Maximum | |
Property and Equipment | |
Estimated Useful Life | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Adopted and Not Yet Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Product revenues, net | $ 74,203 | $ 72,942 | $ 75,040 | $ 74,516 | $ 73,427 | $ 70,176 | $ 73,061 | $ 63,749 | $ 296,701 | $ 280,413 | $ 28,476 | ||
Practical expedients - package | true | ||||||||||||
Operating lease assets | 9,047 | 9,047 | |||||||||||
Operating lease liabilities | $ 10,094 | $ 10,094 | |||||||||||
ASC Topic 606 | Adjustment | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Product revenues, net | $ 4,377 | ||||||||||||
ASC Topic 842 | Adjustment | |||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||
Operating lease assets | $ 9,957 | ||||||||||||
Operating lease liabilities | $ 10,691 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Practical expedient incremental cost | true | true |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Term of payment received | 30 days | 30 days |
Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Term of payment received | 90 days | 90 days |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Transaction Price and Variable Consideration (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Jan. 09, 2018 | |
Allowance categories | |||
Assumed liability related to product sales | $ 22,660 | ||
Rebates and Incentives | |||
Allowance categories | |||
Balance at beginning of the period | $ 129,318 | $ 12,647 | |
Provision related to current period sales | 263,315 | 243,158 | |
Liabilities assumed from asset acquisition | 22,406 | ||
Changes in estimate related to prior period sales | (2,865) | (32) | |
Credits/payments made | (259,867) | (148,861) | |
Balance at end of the period | 129,901 | 129,318 | |
Assumed liability related to product sales | 22,406 | ||
Product Returns | |||
Allowance categories | |||
Balance at beginning of the period | 15,465 | 3,137 | |
Provision related to current period sales | 14,991 | 17,326 | |
Credits/payments made | (2,808) | (4,998) | |
Balance at end of the period | 27,648 | 15,465 | |
Trade Allowances and Chargebacks | |||
Allowance categories | |||
Balance at beginning of the period | 14,841 | 2,256 | |
Provision related to current period sales | 65,155 | 68,189 | |
Liabilities assumed from asset acquisition | 254 | ||
Credits/payments made | (65,976) | (55,858) | |
Balance at end of the period | $ 14,020 | $ 14,841 | |
Assumed liability related to product sales | $ 254 |
REVENUE FROM CONTRACTS WITH C_5
REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue | |||||||||||
Product revenues, net | $ 74,203 | $ 72,942 | $ 75,040 | $ 74,516 | $ 73,427 | $ 70,176 | $ 73,061 | $ 63,749 | $ 296,701 | $ 280,413 | $ 28,476 |
Xtampza ER | |||||||||||
Disaggregation of Revenue | |||||||||||
Product revenues, net | 105,012 | 69,383 | $ 28,476 | ||||||||
Nucynta Products | |||||||||||
Disaggregation of Revenue | |||||||||||
Product revenues, net | 191,689 | 211,030 | |||||||||
Nucynta IR | |||||||||||
Disaggregation of Revenue | |||||||||||
Product revenues, net | 117,680 | 129,917 | |||||||||
Nucynta ER | |||||||||||
Disaggregation of Revenue | |||||||||||
Product revenues, net | $ 74,009 | $ 81,113 |
LICENSE AGREEMENTS (Details)
LICENSE AGREEMENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 09, 2018 | Nov. 30, 2018 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
License Agreements [Line Items] | |||||||||||||
License fee | $ 49,088 | $ 46,754 | $ 48,654 | $ 49,164 | $ 29,726 | $ 46,007 | $ 46,838 | $ 43,106 | $ 193,660 | $ 165,677 | $ 2,595 | ||
Exercise price of warrant | $ 19.20 | ||||||||||||
Nucynta Commercialization Agreement | Assertio | |||||||||||||
License Agreements [Line Items] | |||||||||||||
License fee | $ 10,000 | ||||||||||||
Annual royalty payable | 135,000 | ||||||||||||
Nucynta Commercialization Agreement | Nucynta Products | Assertio | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Payment for inventory | 6,223 | ||||||||||||
Reimbursement for prepaid expenses | 1,987 | ||||||||||||
Liability relating to sales | 22,660 | ||||||||||||
Quarterly royalty payable | 33,750 | ||||||||||||
Base annual net sales for variable royalty | $ 233,000 | ||||||||||||
Nucynta Commercialization Agreement | Nucynta Products | Assertio | Sales Royalty Structure 1 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment as percentage of annual net sales on and after January 1, 2022 | 58.00% | ||||||||||||
Nucynta Commercialization Agreement | Nucynta Products | Assertio | Sales Royalty Structure 2 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment as percentage of annual net sales on and after January 1, 2022 | 25.00% | ||||||||||||
Nucynta Commercialization Agreement | Nucynta Products | Assertio | Sales Royalty Structure 3 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment as percentage of annual net sales on and after January 1, 2022 | 17.50% | ||||||||||||
Royalty payment limit on and after January 1, 2022 | $ 258,000 | ||||||||||||
Nucynta Commercialization Agreement | Nucynta Products | Assertio | Minimum | Sales Royalty Structure 2 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment limit on and after January 1, 2022 | 233,000 | ||||||||||||
Nucynta Commercialization Agreement | Nucynta Products | Assertio | Maximum | Sales Royalty Structure 1 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment limit on and after January 1, 2022 | 233,000 | ||||||||||||
Nucynta Commercialization Agreement | Nucynta Products | Assertio | Maximum | Sales Royalty Structure 2 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment limit on and after January 1, 2022 | $ 258,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | |||||||||||||
License Agreements [Line Items] | |||||||||||||
License fee | $ 15,494 | $ 32,407 | $ 32,407 | $ 29,526 | |||||||||
Third Amendment to the Commercialization Agreement | Assertio | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Number of shares that can be purchased | 1,041,667 | ||||||||||||
Exercise price of warrant | $ 19.20 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Minimum royalty payment eliminated | $ 135 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Maximum | Any 12-month period through January 1, 2022 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Net sales limit upon which Counterparty can terminate without penalty | 180,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Maximum | Any 12-month period commencing on January 1, 2022 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Net sales limit upon which Counterparty can terminate without penalty | 170,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Termination fee owed if Company terminates | $ 5,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Sales Royalty Structure 1 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment as percentage of annual net sales between January 1, 2019 and December 31, 2021 | 65.00% | ||||||||||||
Royalty payment limit between January 1, 2019 and December 31, 2021 | $ 180,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Sales Royalty Structure 2 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment as percentage of annual net sales between January 1, 2019 and December 31, 2021 | 14.00% | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Sales Royalty Structure 3 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment as percentage of annual net sales between January 1, 2019 and December 31, 2021 | 58.00% | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Sales Royalty Structure 4 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment as percentage of annual net sales between January 1, 2019 and December 31, 2021 | 20.00% | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Sales Royalty Structure 5 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment as percentage of annual net sales between January 1, 2019 and December 31, 2021 | 15.00% | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Minimum | Sales Royalty Structure 2 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment limit between January 1, 2019 and December 31, 2021 | $ 180,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Minimum | Sales Royalty Structure 3 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment limit between January 1, 2019 and December 31, 2021 | 210,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Minimum | Sales Royalty Structure 4 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment limit between January 1, 2019 and December 31, 2021 | 233,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Minimum | Sales Royalty Structure 5 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment limit between January 1, 2019 and December 31, 2021 | 258,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Minimum | prior to January 1, 2022 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Sales threshold where supplemental royalty payment is due | 180,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Maximum | Sales Royalty Structure 2 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment limit between January 1, 2019 and December 31, 2021 | 210,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Maximum | Sales Royalty Structure 3 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment limit between January 1, 2019 and December 31, 2021 | 233,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Maximum | Sales Royalty Structure 4 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Royalty payment limit between January 1, 2019 and December 31, 2021 | 258,000 | ||||||||||||
Third Amendment to the Commercialization Agreement | Nucynta Products | Assertio | Maximum | prior to January 1, 2022 | |||||||||||||
License Agreements [Line Items] | |||||||||||||
Sales threshold where supplemental royalty payment is due | $ 243,000 | ||||||||||||
Percentage of supplemental royalty based on net sales | 4.90% |
NET LOSS PER COMMON SHARE - Com
NET LOSS PER COMMON SHARE - Computation of Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
NET LOSS PER COMMON SHARE | |||||||||||
Net loss | $ (2,201) | $ (6,109) | $ (4,712) | $ (9,700) | $ 9,086 | $ (16,502) | $ (13,060) | $ (18,652) | $ (22,722) | $ (39,128) | $ (74,865) |
Weighted-average number of common shares used in net loss per share - basic and diluted | 33,600,566 | 33,481,923 | 33,397,709 | 33,331,917 | 33,453,844 | 32,953,808 | 30,265,262 | ||||
Loss per share - basic and diluted | $ (0.07) | $ (0.18) | $ (0.14) | $ (0.29) | $ (0.68) | $ (1.19) | $ (2.47) |
NET LOSS PER COMMON SHARE - Sum
NET LOSS PER COMMON SHARE - Summary of Potentially Dilutive Securities (Details) - shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock options | |||
Anti-dilutive securities | |||
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding | 3,955,887 | 3,585,856 | 3,037,690 |
Warrants | |||
Anti-dilutive securities | |||
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding | 1,041,667 | 1,041,667 | 2,445 |
Unvested restricted stock | |||
Anti-dilutive securities | |||
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding | 3,018 | 31,943 | |
Restricted stock units | |||
Anti-dilutive securities | |||
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding | 849,679 | 514,603 | 218,872 |
Performance share units | |||
Anti-dilutive securities | |||
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding | 99,400 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
INVENTORY | ||
Raw materials | $ 795 | $ 496 |
Work in process | 1,427 | 671 |
Finished goods | 7,421 | 6,650 |
Total inventory | $ 9,643 | $ 7,817 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||
Prepaid regulatory fees | $ 1,222 | $ 3,035 |
Prepaid development costs | 474 | 78 |
Prepaid insurance | 414 | 340 |
Other prepaid expenses | 854 | 655 |
Other current assets | 141 | 1,008 |
Prepaid expenses and other current assets | $ 3,105 | $ 5,116 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and Equipment | |||
Total property and equipment | $ 14,142 | $ 11,111 | |
Less: accumulated deprecation | (2,288) | (1,837) | |
Property and equipment, net | 11,854 | 9,274 | |
Depreciation expense | 731 | 1,074 | $ 336 |
Disposal of fully depreciated assets | 280 | 905 | |
Computers and office equipment | |||
Property and Equipment | |||
Total property and equipment | 1,453 | 1,277 | |
Laboratory equipment | |||
Property and Equipment | |||
Total property and equipment | 1,220 | 1,613 | |
Furniture and fixtures | |||
Property and Equipment | |||
Total property and equipment | 1,066 | 1,111 | |
Manufacturing Equipment | |||
Property and Equipment | |||
Total property and equipment | 987 | ||
Leasehold improvements | |||
Property and Equipment | |||
Total property and equipment | 541 | 567 | |
Construction-in-process | |||
Property and Equipment | |||
Total property and equipment | $ 8,875 | $ 6,543 |
INTANGIBLE ASSETS - Gross Carry
INTANGIBLE ASSETS - Gross Carrying amount and Accumulated Amortization (Details) - Nucynta Products - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 09, 2018 |
Gross carrying amount | $ 154,089 | $ 154,089 | $ 515,627 |
Accumulated amortization | (124,586) | (109,834) | |
Intangible assets, net | $ 29,503 | $ 44,255 |
INTANGIBLE ASSETS - Costs Accum
INTANGIBLE ASSETS - Costs Accumulated to Acquire Intangible Asset and Consideration Transferred (Details) - USD ($) $ in Thousands | Jan. 09, 2018 | Nov. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Acquisition consideration: | |||||
Upfront cash paid | $ 10,000 | $ 18,877 | |||
Minimum royalty payment obligation | 482,300 | 112,719 | |||
Rebates, incentives, trade allowances and chargebacks assumed | 22,660 | 22,660 | |||
Warrant issued | $ 8,043 | 8,043 | |||
Total acquisition consideration | 515,627 | 162,299 | |||
Minimum royalty payments | $ 537,000 | 132,000 | $ 132,000 | ||
Present value adjustments | $ 19,281 | ||||
Consideration transferred to assets acquired: | |||||
Nucynta Intangible Asset | 154,089 | ||||
Inventory | 6,223 | ||||
Prepaid expenses | 1,987 | ||||
Total consideration allocated to assets acquired | $ 162,299 |
INTANGIBLE ASSETS - Minimum Roy
INTANGIBLE ASSETS - Minimum Royalty Payments - Narrative (Details) - USD ($) $ in Thousands | Jan. 09, 2018 | Nov. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 |
INTANGIBLE ASSETS | ||||
Annual minimum royalty payments | $ 537,000 | |||
2018 | $ 537,000 | 132,000 | $ 132,000 | |
2019 | 135,000 | |||
2020 | 135,000 | |||
2021 | 135,000 | |||
Fair Value of future minimum royalty payments | $ 482,300 | |||
Discounted rate | 5.70% | |||
Interest expense recognized | $ 54,700 | $ 54,700 | ||
Interest expense recognized, relating to royalty payments, prior to third amendment | $ 19,281 | |||
Amortization expense recognized prior to third amendment | $ 107,662 |
INTANGIBLE ASSETS - Summary of
INTANGIBLE ASSETS - Summary of Costs Included in Intangible Asset (Details) - USD ($) $ in Thousands | Jan. 09, 2018 | Dec. 31, 2017 | Dec. 31, 2018 |
Acquisition consideration: | |||
Upfront cash paid | $ 10,000 | $ 18,877 | |
Transaction costs | 667 | ||
Minimum royalty payment obligation | 482,300 | 112,719 | |
Rebates, incentives, trade allowances and chargebacks assumed | 22,660 | 22,660 | |
Total acquisition consideration | 515,627 | 162,299 | |
Minimum royalty payments | 537,000 | $ 132,000 | $ 132,000 |
Present value adjustments | 54,700 | $ 54,700 | |
Rebates and incentives assumed | 22,406 | ||
Trade allowances and chargebacks assumed | $ 254 |
INTANGIBLE ASSETS - Gross car_2
INTANGIBLE ASSETS - Gross carrying amount, accumulated amortization, and net book value (Details) - USD ($) $ in Thousands | 2 Months Ended | 10 Months Ended | 12 Months Ended | |||
Dec. 31, 2018 | Nov. 07, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Nov. 08, 2018 | Jan. 09, 2018 | |
Amortization expense for Nucynta asset acquisition | $ 14,752 | $ 109,834 | ||||
Nucynta Products | ||||||
Gross carrying amount | $ 154,089 | 154,089 | 154,089 | $ 515,627 | ||
Amortization expense for Nucynta asset acquisition | 2,172 | $ 107,662 | ||||
Accumulated amortization | (109,834) | (124,586) | (109,834) | |||
Adjustment due to remeasurement of liability | $ 369,581 | |||||
Additional costs incurred | $ 8,043 | |||||
Intangible assets, net | $ 44,255 | $ 29,503 | $ 44,255 |
INTANGIBLE ASSETS - Warrant and
INTANGIBLE ASSETS - Warrant and Amortization - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 09, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Nov. 30, 2018 |
INTANGIBLE ASSETS | ||||
Common stock that may be purchased upon exercise of warrant (in shares) | 1,041,667 | |||
Exercise price of warrant (in dollars per share) | $ 19.20 | |||
Warrant issued | $ 8,043 | $ 8,043 | ||
Useful life | 4 years | 2 years | ||
Amortization expense recognized prior to third amendment | $ 107,662 | |||
Amortization expense for Nucynta asset acquisition | 14,752 | $ 109,834 | ||
2020 | 14,752 | |||
2021 | $ 14,751 |
INTANGIBLE ASSETS - Onsolis Int
INTANGIBLE ASSETS - Onsolis Intangible Asset - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
May 31, 2016 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 14,752 | $ 109,834 | ||
Onsolis | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Upfront cash payment | $ 2,500 | |||
Intangible asset balance post-impairment | $ 0 | $ 0 | $ 0 | |
Amortization expense | 258 | |||
Selling, general and administrative expenses | Onsolis | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Impairment loss | $ 1,845 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
ACCRUED EXPENSES | ||
Accrued royalties | $ 21,893 | $ 15,138 |
Accrued bonuses | 4,047 | 4,286 |
Accrued incentive compensation | 1,650 | 1,806 |
Accrued payroll and related benefits | 1,154 | 1,544 |
Accrued sales and marketing | 775 | 2,193 |
Accrued interest | 473 | 274 |
Accrued audit and legal | 308 | 480 |
Accrued inventory | 3,745 | |
Accrued other operating costs | 3,180 | 1,085 |
Total accrued expenses | $ 33,480 | $ 30,551 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Nov. 06, 2019lawsuit | Oct. 18, 2019lawsuit | Oct. 02, 2019 | Sep. 11, 2019item | Nov. 30, 2018patent | Sep. 26, 2018lawsuit | Jul. 12, 2018lawsuit | May 04, 2018lawsuit | Feb. 22, 2018patent | Mar. 24, 2015patent | Jan. 31, 2020patent | Oct. 31, 2019lawsuit | Mar. 31, 2019itemlawsuit | Dec. 31, 2019lawsuitpatent | Dec. 31, 2018patent |
Commitments and Contingencies | |||||||||||||||
Period that gives the Company a 30-month stay of FDA approval while the parties have an opportunity to litigate | 45 days | ||||||||||||||
Stay period before FDA can issue a final approval unless it is terminated | 30 months | ||||||||||||||
Number of lawsuits filed | lawsuit | 2 | 4 | 2 | ||||||||||||
Subsequent Events | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Additional patent listed | 2 | ||||||||||||||
Subsequent Events | Xtampza ER | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Number of total patent | 17 | ||||||||||||||
Purdue Pharma, L. P. patent infringement suits | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
PTAB duration for issuing decision | 1 year | ||||||||||||||
Purdue Pharma, L. P. patent infringement suits | Maximum | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
PTAB extended duration for issuing decision | 6 months | ||||||||||||||
Purdue Pharma, L. P. patent infringement suit, District of Delaware | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Number of patents allegedly infringed | 3 | 5 | |||||||||||||
Purdue Pharma, L. P. patent infringement suit, District of Massachusetts | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Number of patents found not infringed | 3 | ||||||||||||||
Teva Litigation | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Stay period before FDA can issue a final approval unless it is terminated | 30 months | ||||||||||||||
Number of patents allegedly infringed | 11 | ||||||||||||||
Number of patents found not infringed | 11 | ||||||||||||||
Number of patents listed in FDA Orange Book | 12 | 17 | |||||||||||||
Number of Orange Book patents asserted to have been infringed | 2 | ||||||||||||||
Number of terms or sets of terms addressed | item | 2 | ||||||||||||||
Number of terms or sets of terms in dispute | item | 6 | ||||||||||||||
Additional patent listed | 2 | ||||||||||||||
Opioid Litigation | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Number of counties filed lawsuits | lawsuit | 3 | ||||||||||||||
Number of lawsuits filed | lawsuit | 3 | 2 | |||||||||||||
Number of lawsuits currently stayed | lawsuit | 0 | ||||||||||||||
Number of lawsuits dismissed | lawsuit | 4 | ||||||||||||||
Payor Groups and Warminster Township | |||||||||||||||
Commitments and Contingencies | |||||||||||||||
Number of lawsuits filed | lawsuit | 3 | ||||||||||||||
Number of lawsuits currently stayed | lawsuit | 0 | ||||||||||||||
Number of payor groups | item | 2 |
TERM LOAN PAYABLE (Details)
TERM LOAN PAYABLE (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2018 | Dec. 31, 2019USD ($) | Jan. 31, 2018USD ($) | Aug. 28, 2012USD ($) | |
Existing Term Loan | ||||
Loan and Security Agreements | ||||
Maximum borrowing capacity | $ 1,000 | |||
Consent and Amendment | ||||
Loan and Security Agreements | ||||
Original principal amount | $ 11,500 | |||
Variable interest rate margin (as a percent) | 0.75% | |||
Final payment fee | $ 719 | |||
Amended Term Loan | ||||
Loan and Security Agreements | ||||
Minimum liquidity ratio | 1.5 | 1 | ||
Additional interest rate in event of default | 5 | |||
Prior to first anniversary | Consent and Amendment | ||||
Loan and Security Agreements | ||||
Prepayment fee (as a percent) | 3 | |||
Between first anniversary and second anniversary | Consent and Amendment | ||||
Loan and Security Agreements | ||||
Prepayment fee (as a percent) | 2 | |||
Following second anniversary | Consent and Amendment | ||||
Loan and Security Agreements | ||||
Prepayment fee (as a percent) | 1 |
TERM LOAN PAYABLE - Future Paym
TERM LOAN PAYABLE - Future Payments (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Future payments under term loan | |
2020 | $ 3,833 |
2021 | 3,833 |
2022 | 3,834 |
Balance | $ 11,500 |
LEASES (Details)
LEASES (Details) $ in Thousands | Dec. 31, 2019USD ($) |
LEASES | |
Operating lease assets | $ 9,047 |
Operating lease liabilities | $ 10,094 |
LEASES - Operating Lease Arrang
LEASES - Operating Lease Arrangements (Details) $ in Thousands | 1 Months Ended | ||||
Mar. 31, 2018USD ($)ft²item$ / ft² | Jan. 31, 2016ft² | Dec. 31, 2019USD ($) | Sep. 30, 2019ft² | Dec. 31, 2018 | |
Lessee, Lease, Description [Line Items] | |||||
Operating lease liabilities | $ | $ 10,094 | ||||
CMO | |||||
Lessee, Lease, Description [Line Items] | |||||
Square of feet of space | ft² | 3,267 | ||||
Term of lease extension option | 2 years | ||||
Advance written notice termination period | 2 years | ||||
Vehicle leases | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 12 months | ||||
Stoughton, Massachusetts | |||||
Lessee, Lease, Description [Line Items] | |||||
Square of feet of space | ft² | 50,678 | ||||
Rent-free term | 4 months | ||||
Lease term | 10 years | ||||
Number of renewal periods | item | 2 | ||||
Term of lease extension option | 5 years | ||||
Base rent | $ | $ 1,214 | ||||
Annual base rent per rentable square foot | $ / ft² | 23.95 | ||||
Canton, Massachusetts | |||||
Lessee, Lease, Description [Line Items] | |||||
Square of feet of space | ft² | 9,660 | ||||
Operating lease liabilities | $ | $ 0 | ||||
Maximum | Stoughton, Massachusetts | |||||
Lessee, Lease, Description [Line Items] | |||||
Increase in annual base rent | 3.10% | ||||
Minimum | Stoughton, Massachusetts | |||||
Lessee, Lease, Description [Line Items] | |||||
Increase in annual base rent | 2.50% |
LEASES - Components of Lease Co
LEASES - Components of Lease Cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lease Cost | |
Operating lease cost | $ 1,446 |
Short-term lease cost | 752 |
Variable lease cost | 283 |
Total lease cost | $ 2,481 |
LEASES - Lease Term and Discoun
LEASES - Lease Term and Discount Rate and Other Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
LEASES | |
Weighted-average remaining lease term - operating leases (years) | 9 years 7 months 6 days |
Weighted-average discount rate - operating leases | 6.10% |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 1,133 |
LEASES - Future Minimum Lease P
LEASES - Future Minimum Lease Payments - ASC Topic 842 (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Future minimum lease payments | |
2020 | $ 1,252 |
2021 | 1,290 |
2022 | 1,328 |
2023 | 1,366 |
2024 | 1,404 |
After 2024 | 6,858 |
Total minimum lease payments | 13,498 |
Less: Present value discount | 3,404 |
Present value of lease liabilities | $ 10,094 |
LEASES - Future Minimum Lease_2
LEASES - Future Minimum Lease Payments - Legacy GAAP (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Future minimum lease payments | |
2019 | $ 1,032 |
2020 | 1,305 |
2021 | 1,261 |
2022 | 1,299 |
2023 | 1,337 |
After 2023 | 8,423 |
Total minimum lease payments | $ 14,657 |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Equity | ||||
Common stock reserved for future issuance (in shares) | 7,194,215 | 6,540,491 | ||
Aggregate offering price | $ 60,000 | |||
Common stock sold (in shares) | 0 | 0 | 3,126,998 | |
Issue price (in dollars per share) | $ 11.36 | |||
Proceeds from the offering, after deducting underwriting discounts and commissions | $ 34,283 | |||
Employee stock purchase plan | ||||
Equity | ||||
Common stock reserved for future issuance (in shares) | 1,046,568 | 788,053 | ||
Stock options | ||||
Equity | ||||
Common stock reserved for future issuance (in shares) | 5,105,980 | 4,710,771 | ||
Warrants | ||||
Equity | ||||
Common stock reserved for future issuance (in shares) | 1,041,667 | 1,041,667 |
STOCK BASED COMPENSATION - Narr
STOCK BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 04, 2018 | Jan. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | May 31, 2015 |
Stock-based compensation | ||||||
Shares of common stock authorized for issuance outstanding (in shares) | 3,955,887 | 3,585,856 | ||||
Employee Stock Purchase Plan, Purchase Price Percentage | 85.00% | |||||
Issuance for employee stock purchase plan, shares | 74,142 | |||||
Proceeds from issuances of common stock from employee stock purchase plans | $ 817 | $ 1,117 | $ 1,141 | |||
Employee Stock Purchase Plan, Compensation Expense | 358 | 493 | 380 | |||
Share-based Compensation | $ 16,528 | $ 13,778 | $ 7,945 | |||
Weighted-average grant date fair value per share of grants (in dollars per share) | $ 9.07 | $ 14.51 | $ 7.86 | |||
Total intrinsic value of stock options exercised | $ 1,506 | $ 3,970 | $ 1,100 | |||
Stock options | ||||||
Stock-based compensation | ||||||
Unrecognized compensation cost related to outstanding options | $ 15,603 | |||||
Period over which unrecognized compensation cost is expected to be recognized as expense | 2 years 6 months | |||||
Number of shares affected by modification | 225,625 | |||||
Restricted stock units | ||||||
Stock-based compensation | ||||||
Period over which unrecognized compensation cost is expected to be recognized as expense | 2 years 7 months 6 days | |||||
Total fair value of shares vested | $ 2,683 | $ 1,782 | $ 210 | |||
Number of shares affected by modification | 116,250 | |||||
Unrecognized stock-based compensation expense | $ 10,189 | |||||
Weighted-average grant date fair value of shares granted | $ 15.48 | $ 23.41 | $ 12.45 | |||
Number of shares vested | 196,139 | |||||
Fair value of restricted stock units vested | $ 4,066 | |||||
Performance share units | ||||||
Stock-based compensation | ||||||
Period over which unrecognized compensation cost is expected to be recognized as expense | 2 years 1 month 6 days | |||||
Vesting period | 3 years | |||||
Unrecognized stock-based compensation expense | $ 272 | |||||
Share-based Compensation | $ 136 | |||||
Weighted-average grant date fair value of shares granted | $ 15.90 | |||||
Number of shares vested | 0 | |||||
2014 Stock Incentive Plan | ||||||
Stock-based compensation | ||||||
Shares of common stock authorized for issuance (in shares) | 2,700,000 | |||||
Increase in number of authorized shares on the first day of each fiscal year, as a percentage of outstanding common stock (as a percent) | 4.00% | |||||
Shares of common stock remaining available for future grant | 1,295,200 | |||||
Vesting period | 4 years | |||||
Contractual life | 10 years | |||||
2014 Stock Incentive Plan | Minimum | ||||||
Stock-based compensation | ||||||
Period following termination date vested options are exercisable | 1 month | |||||
2014 Stock Incentive Plan | Maximum | ||||||
Stock-based compensation | ||||||
Period following termination date vested options are exercisable | 3 months |
STOCK BASED COMPENSATION - Summ
STOCK BASED COMPENSATION - Summary of Restricted Stock and Performance Share Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Performance share units | |||
Restricted stock awards | |||
Granted | 99,400 | ||
Vested | 0 | ||
Balance | 99,400 | ||
Weighted-average purchase price per share | |||
Granted | $ 15.90 | ||
Balance | $ 15.90 | ||
Restricted stock units | |||
Restricted stock awards | |||
Balance | 514,603 | ||
Granted | 634,708 | ||
Vested | (196,139) | ||
Forfeited | (103,493) | ||
Balance | 849,679 | 514,603 | |
Weighted-average purchase price per share | |||
Balance | $ 20.67 | ||
Granted | 15.48 | $ 23.41 | $ 12.45 |
Vested | 20.73 | ||
Forfeited | 18.04 | ||
Balance | $ 17.10 | $ 20.67 |
STOCK BASED COMPENSATION - Su_2
STOCK BASED COMPENSATION - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock option activity | ||
Outstanding | 3,585,856 | |
Granted | 1,095,908 | |
Exercised | (201,308) | |
Cancelled | (524,569) | |
Outstanding | 3,955,887 | 3,585,856 |
Exercisable at end of period | 2,094,720 | |
Weighted average exercise price per share | ||
Outstanding | $ 16.20 | |
Granted | 15.22 | |
Exercised | 10.16 | |
Cancelled | 18 | |
Outstanding | 16 | $ 16.20 |
Exercisable at end of period | $ 15.05 | |
Stock option activity, additional information | ||
Outstanding Weighted-Average Remaining Contractual Term | 7 years 6 months | 8 years |
Outstanding Aggregate Intrinsic Value | $ 21,257 | $ 11,170 |
Exercisable at end of period, Weighted-Average Remaining Contractual Term | 6 years 7 months 6 days | |
Exercisable at end of period, Aggregate Intrinsic Value | $ 13,020 |
STOCK BASED COMPENSATION - Su_3
STOCK BASED COMPENSATION - Summary of Stock-Based Compensation Included in Statement of Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-based compensation | |||
Total stock-based compensation expense | $ 16,528 | $ 13,778 | $ 7,945 |
Research and development expenses | |||
Stock-based compensation | |||
Total stock-based compensation expense | 2,126 | 1,468 | 888 |
Selling, general and administrative expenses | |||
Stock-based compensation | |||
Total stock-based compensation expense | $ 14,402 | $ 12,310 | $ 7,057 |
STOCK BASED COMPENSATION - Su_4
STOCK BASED COMPENSATION - Summary of Valuation Assumptions Used (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants | |||
Risk-free interest rate | 2.40% | 2.60% | 2.00% |
Volatility | 63.30% | 64.80% | 71.00% |
Expected term (in years) | 6 years 1 month 6 days | 6 years 1 month 6 days | 6 years |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Income Tax Expense (Benefit) Computed at Statutory Federal Rate (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Federal income tax expense at statutory rate (as a percent) | 21.00% | 21.00% | 34.00% |
(Increase) decrease income tax (benefit) resulting from: | |||
State income tax, net of federal benefit (as a percent) | 5.59% | 5.89% | 3.93% |
Permanent differences (as a percent) | (3.24%) | (2.51%) | (2.49%) |
U.S. - TCJA (as a percent) | (43.32%) | ||
Research and development credits (as a percent) | 1.83% | 0.52% | 0.53% |
Change in valuation allowance (as a percent) | (25.18%) | (24.90%) | 7.35% |
Income tax expense (benefit) (as a percent) | 0.00% | 0.00% | 0.00% |
Maximum | |||
Federal income tax expense at statutory rate (as a percent) | 35.00% |
INCOME TAXES - Other (Details)
INCOME TAXES - Other (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Deferred tax assets: | |||
U.S. and state net operating loss carryforwards | $ 66,553 | $ 82,501 | |
Research and development credits | 3,768 | 4,364 | |
Operating lease liabilities | 2,630 | ||
Operating lease assets | (2,357) | ||
Accruals and other | 14,286 | 4,676 | |
Depreciation and amortization | 92 | 269 | |
Total deferred tax assets | 84,972 | 91,810 | |
Valuation allowance | (77,285) | (80,290) | |
Deferred tax assets after valuation allowance | 7,687 | 11,520 | |
Deferred tax liabilities: | |||
Deferred tax liabilities - intangible assets | (7,687) | (11,520) | |
Stock-based compensation expense | 5,796 | 3,137 | |
Accrual rebates, returns, and discounts | 7,204 | $ 0 | |
Valuation allowance | |||
Deferred tax asset valuation allowance decrease | 3,005 | ||
Net operating loss carryforwards | |||
Research and development tax credit carryforwards | $ 4,044 | ||
Federal corporate tax rate (as a percent) | 21.00% | 21.00% | 34.00% |
Unrecognized tax benefit associated with IRS examination | $ 902 | ||
Net rate effected unrecognized tax benefit | 235 | ||
Decrease to net operating loss carryforward | $ 36 | ||
Reconciliation of gross unrecognized tax benefits - Federal, State and Foreign Tax | |||
Gross UTB Balance at beginning of period | $ 502 | 1,364 | |
Additions based on tax positions related to the current year | 76 | 64 | 57 |
Additions for tax positions of prior years | 1,307 | ||
Reductions for tax positions of prior years | (24) | ||
Settlements | (902) | ||
Gross UTB Balance at end of period | 578 | 502 | 1,364 |
Net UTB impacting the effective tax rate at December 31 (included in the change in the valuation allowance in rate reconciliation) | 549 | 481 | 680 |
U.S. federal | |||
Net operating loss carryforwards | |||
Operating loss carryforwards | 292,342 | 324,533 | 249,511 |
Research and development tax credit carryforwards | 4,044 | 3,628 | 3,426 |
R&D credit carryover estimated to expire unbenefited due to IRC 382 annual limitations | 1,212 | ||
Operating loss estimated to expire unbenefited due to IRC 382 annual limitations | 28,990 | ||
State | |||
Net operating loss carryforwards | |||
Operating loss carryforwards | 222,629 | 285,181 | 205,074 |
Research and development tax credit carryforwards | 1,112 | $ 885 | $ 589 |
Operating loss estimated to expire unbenefited due to IRC 382 annual limitations | $ 112 |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
EMPLOYEE BENEFITS | |||
Total expense for contributions made to 401(k) plan | $ 1,170 | $ 1,208 | $ 969 |
UNAUDITED QUARTERLY OPERATING_3
UNAUDITED QUARTERLY OPERATING RESULTS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Product revenues, net | $ 74,203 | $ 72,942 | $ 75,040 | $ 74,516 | $ 73,427 | $ 70,176 | $ 73,061 | $ 63,749 | $ 296,701 | $ 280,413 | $ 28,476 |
Cost of product revenues | 49,088 | 46,754 | 48,654 | 49,164 | 29,726 | 46,007 | 46,838 | 43,106 | 193,660 | 165,677 | 2,595 |
Research and development | 2,398 | 2,491 | 2,459 | 2,992 | 2,249 | 1,907 | 2,237 | 2,268 | 10,340 | 8,661 | 8,572 |
Selling, general and administrative | 25,090 | 30,072 | 28,935 | 32,352 | 30,451 | 33,448 | 31,279 | 31,582 | 116,449 | 126,760 | 92,756 |
Total costs and expenses | 76,576 | 79,317 | 80,048 | 84,508 | 62,426 | 81,362 | 80,354 | 76,956 | 320,449 | 301,098 | 103,923 |
Loss from operations | (2,373) | (6,375) | (5,008) | (9,992) | 11,001 | (11,186) | (7,293) | (13,207) | (23,748) | (20,685) | (75,447) |
Interest expense | (211) | (228) | (236) | (234) | (2,404) | (5,868) | (6,158) | (5,700) | (909) | (20,130) | |
Interest income | 383 | 494 | 532 | 526 | 489 | 552 | 391 | 255 | 1,935 | 1,687 | 582 |
Net loss | $ (2,201) | $ (6,109) | $ (4,712) | $ (9,700) | $ 9,086 | $ (16,502) | $ (13,060) | $ (18,652) | $ (22,722) | $ (39,128) | $ (74,865) |
Weighted-average shares - basic (in shares) | 33,250,180 | 33,012,174 | 32,967,718 | 32,903,674 | |||||||
(Loss) earnings per share - basic | $ 0.27 | $ (0.50) | $ (0.40) | $ (0.57) | |||||||
Weighted-average shares - diluted (in shares) | 33,769,765 | 33,012,174 | 32,967,718 | 32,903,674 | |||||||
(Loss) earnings per share - diluted | $ 0.27 | $ (0.50) | $ (0.40) | $ (0.57) | |||||||
Weighted-average shares - basic and diluted (in shares) | 33,600,566 | 33,481,923 | 33,397,709 | 33,331,917 | 33,453,844 | 32,953,808 | 30,265,262 | ||||
Loss per share - basic and diluted | $ (0.07) | $ (0.18) | $ (0.14) | $ (0.29) | $ (0.68) | $ (1.19) | $ (2.47) | ||||
Third Amendment to the Commercialization Agreement | |||||||||||
Cost of product revenues | $ 15,494 | $ 32,407 | $ 32,407 | $ 29,526 | |||||||
Interest expense associated with minimum royalty payments | $ 2,169 | $ 5,641 | $ 5,943 | $ 5,528 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Events $ / shares in Units, $ in Thousands | Feb. 13, 2020USD ($)$ / shares | Feb. 06, 2020USD ($) |
2020 Term Loan | ||
SUBSEQUENT EVENTS | ||
Aggregate principal amount | $ 200,000 | |
Maturity anniversary | 48 months | |
Minimum annual net sales | $ 200,000 | |
2020 Term Loan | LIBOR | ||
SUBSEQUENT EVENTS | ||
Interest floor rate (as a percent) | 2.00% | |
Variable interest rate margin (as a percent) | 7.50% | |
2.625% Convertible notes | ||
SUBSEQUENT EVENTS | ||
Aggregate principal amount | $ 143,750 | |
Interest rate (as a percent) | 2.625% | |
Initial conversion rate | 0.0342618 | |
Initial conversion price (in dollars per share) | $ / shares | $ 29.19 | |
Initial conversion price, premium (as a percent) | 35.00% | |
Last reported sale price (in dollars per share) | $ / shares | $ 21.62 | |
Nucynta Purchase Agreement | Assertio | Nucynta Products | ||
SUBSEQUENT EVENTS | ||
Aggregate purchase price | $ 375,000 | |
Royalty payment as percentage of annual net sales between January 1, 2019 and December 31, 2021 | 14.00% | |
Guaranteed royalty | $ 34,000 | |
Nucynta Purchase Agreement | Assertio | Nucynta Products | Minimum | ||
SUBSEQUENT EVENTS | ||
Net sales | 180,000 | |
Nucynta Purchase Agreement | Assertio | Nucynta Products | Maximum | ||
SUBSEQUENT EVENTS | ||
Net sales | $ 243,000 |